Kazakhstan -- Stablecoin Regulations Regulatory Overview

Kazakhstan has adopted a dual-track approach to digital asset regulation, primarily distinguishing between the national regulatory framework and the specialized regime of the Astana International Financial Centre (AIFC). This leads to different rules and classifications for stablecoins depending on where they are issued or offered.

Regulatory Framework for Stablecoins in Kazakhstan

I. National Framework (Outside AIFC)

The primary legislation governing digital assets at the national level is:

• Law of the Republic of Kazakhstan No. 278-VII ZRK dated June 24, 2023 "On Digital Assets in the Republic of Kazakhstan" (and subsequent amendments).
  • Note: This law came into force on September 1, 2023, and defines the legal status and turnover of digital assets.
  • URL (Official publication, in Russian/Kazakh): Zakon.kz - Law on Digital Assets (You may need to use translation tools for full text).

1. Classification of Stablecoins:

• The Law "On Digital Assets" defines "digital assets" broadly. Stablecoins would typically fall under the category of "secured digital assets" (обеспеченные цифровые активы).
• Secured Digital Asset: A digital asset that certifies property rights to specific goods, services, or property, including money, and is backed by real assets or obligations of the issuer.
• Not classified as E-money/Payment Tokens: Stablecoins, under this law, are treated as a distinct category of digital assets, separate from electronic money as defined by the Law "On Payments and Payment Systems" or traditional payment tokens. E-money typically refers to digital representations of fiat currency issued by banks or licensed payment organizations.
• Not classified as Securities: While some stablecoins could potentially be deemed "security tokens" if they grant specific investment rights (e.g., profit share, equity), most typical fiat-backed stablecoins are generally viewed as secured digital assets rather than traditional securities under this framework.

2. Reserve Requirements:

• The national law provides general principles for secured digital assets, stating they must be backed by real assets or obligations. However, it does not specify granular reserve requirements (e.g., 1:1 fiat backing, independent audits, segregated accounts) for stablecoins specifically within the national jurisdiction. These specifics would likely be elaborated in subordinate legislation by the National Bank of Kazakhstan (NBK) or the Agency for Regulation and Development of Financial Market (ARDFM).
• Issuers of such assets are responsible for ensuring the backing and disclosing information about it.

3. Issuer Licensing:

• The national law requires licensing for activities related to digital assets, including the organization of trading platforms for digital assets, storage services, and issuance activities.
• The National Bank of Kazakhstan and the Agency for Regulation and Development of Financial Market (ARDFM) are the primary regulators.

4. Redemption Rights:

• For secured digital assets, the law implies redemption rights by stating they certify property rights to underlying assets, including money. The specific mechanism for redemption would be defined by the issuer's terms and conditions, subject to the general principles of consumer protection and contractual law.

5. Algorithmic Stablecoin Rules:

• The national Law on Digital Assets does not explicitly address "algorithmic stablecoins." Given the general emphasis on "secured digital assets" being backed by real assets or obligations, purely algorithmic stablecoins (without tangible asset backing) would likely face significant regulatory hurdles or be outright disallowed. The regulatory focus is on tangible asset backing to ensure stability and protect users.

6. CBDC Interaction (Digital Tenge):

• The National Bank of Kazakhstan (NBK) is actively piloting a Digital Tenge (CBDC).
  • URL: NBK - Digital Tenge Project
• The Digital Tenge is intended to be a third form of national currency, alongside cash and non-cash money.
• Interaction: The NBK has stated that the Digital Tenge aims to enhance payment efficiency and potentially integrate with innovative financial products. While private stablecoins are not explicitly prohibited, the CBDC will serve as the primary official stable digital currency. The NBK's future regulations may clarify the complementary or competitive roles of private stablecoins relative to the Digital Tenge. It's likely that private stablecoins, if allowed to operate broadly, would be subject to strict oversight to prevent systemic risks and ensure consumer protection, potentially requiring interoperability with the CBDC infrastructure.

II. Astana International Financial Centre (AIFC) Framework

The AIFC is a special economic zone with its own legal system based on English common law, and its own financial regulator, the Astana Financial Services Authority (AFSA). The AIFC often serves as a sandbox or a more developed environment for financial innovation, including digital assets.

• AIFC Acts, Rules, and Regulations:
  • AIFC Financial Services Framework Regulations (FSFR)
  • AIFC Digital Asset Trading Rules
  • AIFC Digital Asset Business Rules
  • URL (AFSA Rules and Regulations): AIFC AFSA Regulations

1. Classification of Stablecoins:

• Within the AIFC, stablecoins are most likely to be classified as "Asset-Referenced Tokens" or potentially "Security Tokens," depending on their specific design and the rights they convey.
• Asset-Referenced Token: A token that purports to maintain a stable value by referencing other assets (e.g., fiat currency, commodities, or a basket of assets). This is the most common classification for fiat-backed stablecoins.
• Security Token: A token that qualifies as a "security" under the AIFC Financial Services Framework Regulations (e.g., shares, debentures, collective investment scheme units). If a stablecoin offers rights akin to traditional securities (e.g., profit sharing, voting rights in the issuer), it would be classified as a security token.
• E-money/Payment Tokens: The AIFC has clear definitions for e-money. Stablecoins issued by regulated entities within the AIFC that meet the strict criteria for e-money could be classified as such, but generally, the "Asset-Referenced Token" category is more common for crypto-native stablecoins.

2. Reserve Requirements:

• For Asset-Referenced Tokens within the AIFC, the AFSA imposes stringent requirements:
  • 1:1 Backing: Issuers are typically required to hold reserves equal to the nominal value of the tokens in circulation.
  • Segregation: Reserves must be held in segregated accounts with regulated financial institutions, separate from the issuer's operational funds.
  • Auditing: Regular, independent audits of reserve holdings are usually mandated to verify the backing.
  • Prudent Management: Issuers must demonstrate robust risk management, governance, and capital adequacy.

3. Issuer Licensing:

• Issuing, offering, or providing services related to digital assets (including stablecoins) within the AIFC requires an appropriate license from the Astana Financial Services Authority (AFSA).
• Activities like operating a Digital Asset Trading Facility (DATF), providing Custody of Digital Assets, or Arranging Deals in Digital Assets, all require specific AFSA authorization.

4. Redemption Rights:

• Issuers of Asset-Referenced Tokens in the AIFC are generally required to provide clear and unambiguous redemption mechanisms, allowing holders to redeem their tokens for the underlying asset (e.g., fiat currency) at par value. These rights are critical for consumer protection and maintaining the token's peg.

5. Algorithmic Stablecoin Rules:

• The AIFC framework, with its emphasis on "Asset-Referenced Tokens" backed by real, verifiable assets, is generally not conducive to purely algorithmic stablecoins. The AFSA's cautious approach to investor protection and financial stability means that stablecoins without clear, tangible, and independently auditable backing would likely not be approved or licensed within the AIFC.

6. CBDC Interaction:

• The AIFC has often been a testing ground for innovations that may later be adopted nationally. While the NBK's Digital Tenge project is national, the AIFC's regulated digital asset ecosystem could potentially integrate with or leverage the Digital Tenge. For instance, private stablecoins within the AIFC might eventually be required to use the Digital Tenge as their underlying reserve asset or facilitate interoperability with it for certain payment flows.

Summary and Key Takeaways:

• Dual System: Kazakhstan has a two-tiered regulatory approach: a general national framework and a more detailed, specific framework within the AIFC.
• Classification: Nationally, stablecoins are "secured digital assets." In the AIFC, they are typically "Asset-Referenced Tokens." They are generally not classified as e-money or traditional securities unless their features strictly align with those definitions.
• Backing: Both frameworks emphasize the need for backing. The AIFC has more specific and stringent requirements (1:1, segregated accounts, audits) for its regulated Asset-Referenced Tokens.
• Licensing: Issuance and related services for stablecoins require licensing from the relevant authority (NBK/ARDFM nationally, AFSA in AIFC).
• Algorithmic Stablecoins: Highly unlikely to be supported or approved due to the focus on tangible asset backing for stability.
• CBDC: The Digital Tenge is a separate, official initiative by the NBK. Private stablecoins will likely need to navigate coexistence with, and potentially integrate with, the CBDC in the future.

This regulatory landscape is still evolving, and specific requirements can be further detailed in subordinate legislation and regulatory guidance.