Kazakhstan is Taking Steps to Curtail Illegal Mining Operations

• Kazakhstan government tightens regulations for crypto miners.
• Crypto firms with their mining infrastructure come under the first category.

As the cryptocurrency boom expanded at the start of 2023, giant crypto firms started pouring their money into Bitcoin mining. This interest from institutional investors encourages small investors to join. The Kazakhstan government announced its new legislation on crypto mining to increase the fair competition between crypto market participants and develop the crypto industry.

In 2021 Kazakhstan was among the first who welcomed Chinese miners when the China government announced a ban on crypto trading and mining. It helped the oil-rich Central Asian country to maintain its place as the third-largest contributor to Bitcoin mining for over a year.

The temporary ban on mining-affected China’s position as the biggest Bitcoin mining hub, placing the US in the top position. Currently, most Bitcoin mining companies in the United States (35.4%), Kazakhstan (18.1%) and Russia (11.23%) are placed in second and third positions.

To mitigate unlawful mining operations and tax fraud, the Central Asian country of Kazakhstan announced its new legislation on Feb 6, 2023. The current head of the nation Kassym-Jomart Tokayev, signed a new law to expand the regulatory framework for crypto miners. As per local reports, the law will come into force from Apr 1, 2023.

As per reports, the new crypto regulatory guidelines mainly focused on two major things: first, the acquirer of secured crypto assets requires permission from authorities. The second legislation focused on unsecured crypto assets. To mitigate tax evasion, the crypto miners have to sell at least 75% of their revenue through registered crypto exchanges.

The legislation will issue a licensing regime for all crypto miners for a limited period of three years for two categories. The crypto firms with their own mining infrastructure come under the first category, and those who didn’t directly apply for energy quota fall under the second category.

As per Blockchain.com data, the Bitcoin hash rate was around 282 on Saturday, up from a weekly average of 275 hash rate last week. According to CoinMarketCap, Bitcoin is trading at 21,815, up by 0.50% from the past 24 hours.

Recently the National Bank of Kazakhstan (NBK) has launched “digital tenge,” a new pilot project on Central Bank Digital Currency (CBDC). On Feb 3, the NBK and Binance, a crypto exchange jointly published a report on crypto adoption and decentralized finance (DeFi).