Kazakhstan’s Crackdown on Illegal Crypto Exchanges

In a significant move towards regulating the cryptocurrency market, Kazakhstan has taken decisive action by shutting down 130 unauthorized cryptocurrency exchanges. This bold step was announced during a government meeting by Kairat Bizhanov, Deputy Chairman of the Financial Monitoring Agency (AFM). The crackdown also led to the seizure of virtual assets valued at $16.7 million, highlighting Kazakhstan’s rigorous stance against illicit financial activities.

Reasons Behind the Closure

The primary reason for closing these crypto exchanges was their involvement in laundering money obtained through criminal activities. Under Kazakhstan’s legislation, only those cryptocurrency platforms that have a license from the Astana Financial Services Authority (AFSA) and are integrated with local banks are permitted to operate legally. Any platform functioning without these credentials is deemed illegal.

Enhancing Financial Security Measures

The AFM is not only focused on shutting down illegal operations but is also intensifying its efforts to combat unlawful cash-out activities related to cryptocurrencies. In 2024 alone, authorities uncovered 81 shadow groups with a combined turnover exceeding 24 billion tenge (over $43 million). One of the main weaknesses identified in the financial system remains ATMs, which continue to be exploited for illicit withdrawals.
Furthermore, despite stringent restrictions, cash withdrawal volumes have continued to rise. According to Bizhanov, approximately 13.2 trillion tenge ($24.1 billion) has been withdrawn so far—an increase of one trillion from last year.

New Regulations for Cryptocurrency Transactions

To curb illegal transactions and enhance transparency in financial operations, the AFM along with Kazakhstan’s National Bank has introduced several new rules:
– Deposits exceeding 500,000 tenge ($913) now require an individual identification number and confirmation via a mobile application.
– Banks are mandated to retain ATM video recordings for at least 180 days.
– There is an expansion in using biometric identification methods like facial recognition and fingerprint scanning for all cash-related transactions.
These measures aim to prevent anonymous transfers without identifying either sender or receiver and ensure greater security within financial systems.
Kazakhstan’s proactive approach serves as an important reminder of the need for comprehensive regulation in rapidly evolving digital asset markets globally. By setting clear legal frameworks and enforcing strict compliance measures, countries can protect their economies while fostering innovation within this dynamic sector.
In recent developments reflecting its commitment towards integrating digital finance solutions responsibly into its economy; Kazakhstan launched a pilot version of Evo (KZTE), its national stablecoin pegged against local currency—tenge—further illustrating its forward-thinking approach towards cryptocurrency regulation amidst burgeoning adoption worldwide.