Kazakhstan’s Financial Monitoring Agency (FMA) has taken a firm stance against unlicensed crypto exchanges. Throughout 2023, the FMA has actively shut down access to nearly a thousand crypto exchanges operating without appropriate licensing.
Crackdown On Unlicensed Crypto Exchanges
The actions by the FMA were disclosed in a press release published on the Kazakh government’s website. The agency’s chairman, Ruslan Ostroumov, emphasized during a meeting of the Eurasian Group on Combating Money Laundering in China, noting:
This year, 980 illegal cryptocurrency exchange platforms have been blocked in the country. Nine investigations have been launched into illegal exchange transactions worth $36.7 million and laundering of criminal proceeds. Preventive measures are being taken.
Kazakhstan’s Digital Assets Law, enacted in February 2023, set the stage for these actions. The law prohibits creating, trading, and operating digital currencies and cryptocurrency exchanges without a national license.
The Astana International Financial Center (AIFC) plays a crucial role in this regulatory framework, as it is the body in control of providing initial authorization for digital currency-related operations within the economic zone of Kazakhstan.
In June, the Astana International Financial Center granted Binance a permanent license, allowing it to offer services to users in Kazakhstan. These services include exchange and conversion options, deposit and withdrawal of fiat currency, and custody of digital currency assets.
This development suggests that while the regulatory authorities in Kazakhstan are not inherently opposed to cryptocurrency exchanges, they are “firmly” against the operation of unlicensed digital asset exchanges within the region.
Coinbase Impacted By The Blockade
Coinbase, one of the world’s leading digital currency exchanges, was impacted by Kazakhstan’s regulatory measures. The Ministry of Culture and Information of Kazakhstan announced the blocking of Coinbase earlier last month.
This decision responded to the exchange’s alleged non-compliance with Kazakhstan’s digital assets legislation and associated fraudulent activities.
Local media sources reported that the Ministry’s decision to block Coinbase stemmed from the exchange’s engagement in crypto trading activities, contradicting specific provisions of Kazakhstan’s Law on Digital Assets.
The request to block access to Coinbase reportedly originated from the Ministry of Digital Development, Innovation, and Aerospace Industry, citing the exchange’s operations as non-compliant with national regulations.
The enforcement against Coinbase and other platforms was carried out under the Communications Act of Kazakhstan. This legislation forces internet service providers to restrict access to sites hosting “prohibited” content, which, in this case, pertains to unregistered and non-compliant digital currency exchanges.
Regardless of the crackdown on crypto, the global crypto market has continued to express bullishness. Notably, over the past 24 hours, the overall market value has surged by nearly 3%, currently at a valuation of $1.7 trillion.
Featured image from Unsplash, Chart from TradingView