National Bank of Kazakhstan Proposes to Restrict the Exchange and Mining of Cryptocurrencies

The central bank of Kazakhstan has submitted proposals to its government to restrict some cryptocurrency-related activities. However, the bank’s chairman admitted that he does not fully understand what cryptocurrency is. Experts also weighed in on the reality of banning crypto mining in the country.

Also read: Central Bank of Singapore Sees No Reason to Regulate Cryptocurrencies

National Bank of Kazakhstan’s Proposals

The National Bank of Kazakhstan has proposed restricting some activities relating to cryptocurrency in the country, Ria Novosti reported. The central bank’s chairman, Daniyar Akishev, said at a press conference in Astana on Wednesday that this is “to protect the public from speculative risks,” the publication conveyed.

“The high volatility of the prices of the cryptocurrencies in the short term gives the owner the opportunity to make money on speculative transactions,” Akishev was quoted saying. “But in the future [it] may lead to significant damage from the loss of funds by citizens.” He revealed:

We sent our proposals to the government, in which we suggest carrying out a series of tougher measures, including prohibiting the exchange of the national currency for cryptocurrencies, prohibiting the activities of some companies that generate cryptocurrencies and so on.

Amending Legislation

In addition, Akishev said on Wednesday that the bank and the government are “developing an approach to the issuance and circulation of cryptocurrencies.” This reiterates his statement last week that amendments to the legislation will be developed to regulate them and that currently their legal status has not been determined.

According to him, the complexity lies in the features of cryptocurrencies, “which are supranational in nature, and also are not someone’s obligation or guarantee, including the state,” Ria Novosti detailed.

“The state cannot guarantee the real value and safety of funds based on cryptocurrencies, which have no security in the form of real assets and legally bound persons,” Akishev was quoted.

He noted that people want to invest in cryptocurrencies but they are not taking measures to ensure the safety of their assets. If the bubble suddenly bursts, he exclaimed, “what will happen to the people who invested? I guess they can come to the state and say, ‘why did you not warn us in time?’ Therefore, I warn you now that these operations carry risks.”

Akishev was quoted by Kazinform admitting:

I still do not really understand what cryptocurrency is…it is a tool that does not have a normal issuer, a single centralized body, respectively, is not backed by anything and its value is based solely on speculative operations.

Is It Possible to Ban Mining in Kazakhstan?

Following the statements by the chairman, Tengrinews interviewed some experts to ascertain whether it is possible to ban mining in Kazakhstan. They “agreed that it would be virtually impossible to do this, however, they agreed that regulatory measures should be introduced,” the publication reported.

Financier Eset Butin expressed that mining itself does not carry risks for a country. He noted that mining is not prohibited by law today and it is each person’s own business and risk whether to carry out mining, adding that:

“It will not be possible to build any restrictions in terms of home mining…A person is engaged in mining, paying for electricity. What [are the] problems?

Lawyer Vitaly Kazantsev noted that “before banning mining in Kazakhstan, it will be necessary to give this process an exhaustive definition, and this can be difficult,” the publication described. “First of all, the very process of mining is carried out by those who extract cryptocurrencies independently, and the second part – companies that lease these mining farms, etc.,” he described. “Question, who does the chairman of the National Bank want to prohibit?”

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