Kazakhstan Limits Crypto Trading to Central Bank-Approved Coins

Kazakhstan is taking a significant step towards regulating its cryptocurrency market. President Kassym-Jomart Tokayev has signed new legislation establishing a framework for licensed crypto exchanges operating within the country. Crucially, these new laws also grant the central bank the authority to approve which cryptocurrencies can be traded on these exchanges.

This move signifies a more formalized and controlled approach to crypto within Kazakhstan, which has become a notable player in the crypto mining landscape. The creation of licensed exchanges suggests an intent to foster a legitimate digital asset industry, but the requirement for central bank approval of tradable coins introduces a layer of centralized oversight.

Expert View

The implications of this legislation are multifaceted. On one hand, establishing licensed exchanges could attract institutional investment and bring greater legitimacy to the crypto sector in Kazakhstan. Central bank approval of tradable coins, however, represents a potential bottleneck and could limit the selection of cryptocurrencies available to Kazakh traders. This approach is in line with other nations which prefer to exert significant control over the space. The degree of influence the Central Bank exerts, and the criteria it applies for coin approval, will be critical factors in determining the long-term impact on innovation and market activity.

From a market perspective, this decision could create a bifurcated system. Coins approved by the central bank might experience increased trading volume and perceived legitimacy within Kazakhstan, while those excluded could face challenges in gaining traction. This could concentrate market activity on a select few assets, potentially stifling the diversification that's often seen as a benefit of decentralized crypto markets.

What To Watch

Several key aspects need close monitoring in the coming months. Firstly, the criteria the central bank uses to approve (or disapprove) cryptocurrencies will be crucial. Is it focused solely on established, large-cap coins, or will it also consider innovative projects with smaller market caps? Transparency in this process is vital for market confidence. Secondly, the speed at which licenses are granted to crypto exchanges will indicate the government's commitment to actually fostering a regulated market. Delays could create uncertainty and discourage participation.

Finally, how the regulations are enforced will determine their effectiveness. A strict approach could stifle innovation and drive activity underground, while a more flexible approach could foster a balanced ecosystem. The interplay between these factors will shape the future of cryptocurrency in Kazakhstan.

Source: Cointelegraph