The Ministry of Culture and Information of the Republic of Kazakhstan has recently confirmed that it has blocked access to the Coinbase website within the country. This decision was made due to alleged violations of Kazakhstan’s new digital assets law. The Ministry of Digital Development ordered the blocking of Coinbase’s website, accusing the cryptocurrency exchange of breaching the Law of Digital Assets. This move follows reports from September, which highlighted access difficulties to Coinbase and other major international crypto exchanges, including Kraken, from local IP addresses within Kazakhstan.
Coinbase Accused of Violating Digital Assets Law
The Ministry of Digital Development claims that Coinbase has violated the country’s Law on Digital Assets, which came into effect in February 2023. According to Article 11, Clause 5 of the law, the issuance and trading of digital currencies without a national license is prohibited. The ministry believes that Coinbase’s cryptocurrency trading activities contradict this clause. In response to the alleged violation, the Ministry of Digital Development requested the Ministry of Information to limit access to the Coinbase website. Consequently, internet service providers in Kazakhstan were instructed to block the exchange’s website under the provisions of the Communications Act.
While several other crypto exchanges have obtained licenses to operate within the Astana International Financial Center (AIFC), including Binance, CaspianEx, Biteeu, ATAIX, Upbit, Xignal&MT, and Bybit, Coinbase and Kraken, along with other international exchanges, have faced access restrictions. This situation has resulted in difficulties for cryptocurrency users in the country. Reports from the Telegram channel FINANCE.kz, now known as The Tenge website, highlighted the inaccessibility of most foreign brokers’ and crypto exchanges’ websites in Kazakhstan without the use of a VPN. Interestingly, Interactive Brokers continues to open accounts for users in Kazakhstan.
Kazakhstan has adopted a strict regulatory approach to cryptocurrencies, including the cryptocurrency mining sector, which is one of the largest in the world. In October, eight major cryptocurrency mining operators in the country expressed their concerns to President Kassym-Jomart Tokayev via an open letter. The letter focused on the high energy prices for miners and the challenging conditions faced by the crypto-mining industry in Kazakhstan.
In Kazakhstan, both local and foreign companies with limited resources have the opportunity to obtain a license to operate within the Astana International Financial Center (AIFC). These companies can provide FinTech and RegTech services without immediate full compliance with all regulatory requirements. To register a company in the AIFC, an initial application outlining the project’s development concept must be submitted. If approved, a complete application should follow within two months for further review by the AIFC Financial Services Authority (AFSA). Authorization is granted on the FinTech Lab site once all prerequisites are met.
The decision by the Ministry of Culture and Information of the Republic of Kazakhstan to block access to Coinbase’s website due to violations of the country’s digital assets law reflects the strict regulatory stance the country has taken towards cryptocurrencies. While some crypto exchanges have obtained licenses to operate within the AIFC, Coinbase and other international exchanges have faced access restrictions. These measures have led to difficulties for cryptocurrency users in Kazakhstan. The country’s cryptocurrency mining sector, one of the world’s largest, has also raised concerns regarding high energy prices and challenging conditions. As Kazakhstan continues to navigate its regulatory landscape, the cryptocurrency industry within the country may face further changes and challenges.
