Stablecoin issuer / redeemer in Kazakhstan

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).

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.

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.

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.

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.

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.

License Type: Operating a Digital Asset Trading Facility (DATF).

License Type: Providing Payment Services Provider (PSP) services.

Must be incorporated or established as a legal entity within the AIFC.

Maintain a physical office presence in the AIFC.

Have key personnel (e.g., CEO, Compliance Officer) primarily based in the AIFC.

Base Capital: This varies significantly based on the type and scope of the license.

Digital Asset Trading Facility (DATF): Typically USD 300,000 (or KZT equivalent) for non-dealing DATFs. If the DATF also acts as a Dealer, higher capital may be required.

Payment Services Provider (PSP): Varies depending on the specific payment services and tiers of authorization, ranging from USD 50,000 to USD 200,000 (or KZT equivalent) for higher-tier PSPs.

Adherence to AIFC AML Rules, which are aligned with FATF (Financial Action Task Force) recommendations.

Law of the Republic of Kazakhstan "On Counteracting Legalization (Laundering) of Criminal Proceeds and Financing of Terrorism" (No. 191-IV dated August 28, 2009, as amended): This is the primary AML/CFT law. It designates the Financial Monitoring Agency (FMA) as the competent authority and outlines the obligations of "financial organizations" and other reporting entities (which, under FATF standards, includes VASPs). It requires reporting entities to identify customers, monitor transactions, and report suspicious activities, including those related to terrorism financing and proliferation, which often involves sanctions screening.

Financial Monitoring Agency (FMA): The FMA is Kazakhstan's Financial Intelligence Unit (FIU) and the primary body responsible for enforcing AML/CFT laws, including monitoring compliance with international sanctions.

A. UN Sanctions:

B. OFAC (U.S.) Sanctions:

C. EU Sanctions:

Mandatory Segregation: Licensed custodians are required to segregate client digital assets from their own proprietary assets. These assets must be clearly identifiable as client assets.

Capital Requirements: Licensed firms must meet specific minimum capital requirements (financial resources) based on the nature and scale of their business, as detailed in the Prudential Rules. This serves as a buffer against operational losses.

General Republic of Kazakhstan: The National Bank of Kazakhstan has historically maintained a cautious stance, stating that cryptocurrencies are not legal tender and are generally viewed as digital property or assets. The use of cryptocurrencies for payments is prohibited outside the AIFC.

Astana International Financial Centre (AIFC): The AIFC operates under its own jurisdiction based on English common law and has a more progressive approach to digital assets. Within the AIFC, specific regulations allow for the operation of digital asset exchanges and other crypto-related activities under the supervision of the AIFC Financial Services Authority (AFSA). Here, digital assets are recognized as a specific class of assets.

General Principle: Gains derived from the sale or exchange of digital assets are generally subject to Individual Income Tax (IIT). When a cryptocurrency is sold for a higher price than its acquisition cost, the difference is considered a capital gain.

General Principle: Profits from the sale or exchange of digital assets are subject to Corporate Income Tax (CIT).

VAT Exemptions: AIFC participants are generally exempt from VAT on the supply of financial services and certain other specified activities within the AIFC. This could extend to qualifying digital asset services.

Potential Exemptions: The AIFC offers a more attractive tax regime. Participants (legal entities registered within the AIFC) may be exempt from CIT on certain income, including income from financial services and investment activities, for a period of up to 50 years. This could potentially include profits from qualifying digital asset activities, depending on the specific registration and nature of the activity. Individuals working in the AIFC also enjoy tax benefits. It is crucial to verify the specific conditions for these exemptions with the AFSA and a tax advisor.

AIFC Acts, Rules, and Regulations:

AIFC Digital Asset Business Rules

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.

The National Bank of Kazakhstan and the Agency for Regulation and Development of Financial Market (ARDFM) are the primary regulators.

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.