Licenses for Crypto Entities Introduced Through Newly Passed Legislature
Kazakhstan has officially announced the passing of regulations pertaining to the circulation and mining operations of digital currencies in the country.
The legislature underwent the usual process i.e. it was first submitted to the parliament in the shape of the bill. Secondly, it was debated, commented upon, and finally was passed through the votes of lawmakers in Nur-Sultan i.e. country’s capital.
The legislation is titled ‘On Digital Assets in the Republic of Kazakhstan” which describes guidelines for developing the digital assets’ ecosystem in Kazakhstan.
Instead of the Lower House, the Upper House Passed the Law
The bill was awaiting approval by lawmakers for a long and was kept pending for the past year. However, the voting was deferred until the year 2023 and in January this year, the lawmakers once again took up the proposed bill.
However, during the review, the lawmakers identified further necessary amendments and alterations in the legislature. Resultantly, the bill was sent back to the Mazhilis for amendment purposes.
In the meantime, by the decree of the country’s President, Mazhilis was dissolved for political reasons on 19th January 2023. The President then announced the holding of early elections for restoring the Mazhilis.
Kazakhstan President’s Role in Passing Crypto Law
However, in the absence of Mazhilis, the Upper House of Kazakhstan is empowered to pass legislation through voting.
Consequently, the law was passed by the Upper House for regulating crypto mining, trading, and other related activities.
Though Parliament has approved the legislature, final approval rests with the country’s President without whose signature it cannot become a law. This is also the case with Kazakhstan’s crypto legislation.
It is expected that the President would soon sign the document along with other key legislatures concerning crypto.
For instance, a tax amendment bill, which particularly deals with crypto, would also require approval of the President through signing.
Real Objective behind Passing of Legislature
One of the objectives which the Government in Kazakhstan wanted to achieve through the legislature was to supervise and monitor crypto activities.
Kazakhstan is amongst the top countries, which consists of one of the world’s largest crypto mining industries.
The mining industry has continued growing larger in Kazakhstan as it continued offering highly favorable conditions to the respective industry.
Electricity tariffs in Kazakhstan were cheap which was duly noticed by crypto miners and subsequently they expanded mining operations in the country.
Furthermore, China forced evicted crypto miners and since Kazakhstan shared borders with China, Chinese miners re-located to Kazakhstan.
Kazakhstan thereafter became the hotspot for worldwide crypto miners for a variety of reasons. The country offered the conditions and the environment where the crypto-mining sector could thrive.
The country had an abundance of electricity to offer plus other factors also made it highly profitable for the miners to carry out their mining activities.
However, the industry’s growth introduced several challenges in the country. For instance, Kazakhstan started to feel a shortage of electricity very soon after the massive migration of crypto miners into the country.
It then became obvious for the Government in Kazakhstan to immediately do something about mining activities. The first option which came into the minds of government officials was crypto regulation.
So in order to ensure that the electricity deficit is managed, the law on crypto has been approved by the Senate in Kazakhstan.
The new law now provides for a legal framework whose effectiveness shall be tested once it starts to be implemented.
Design of Legislature
Kazakhstan’s crypto regulation most importantly introduces a licensing system for crypto miners as well as crypto trading entities.
Crypto firms would need to gain access to regulatory licenses before they can start operating. Crypto firms will not be able to operate if they do not have a regulatory license.
It is hoped by the authorities concerned that the licensing would enable the country to attract foreign firms and hence the foreign direct investment (FDI).
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