The Ministry of Culture and Information of the Republic of Kazakhstan has officially confirmed that it blocked access to the Coinbase website in the country. This action was taken due to alleged violations of the country’s new digital assets law. The order to block Coinbase’s website came from the Ministry of Digital Development after the exchange was accused of violating the Law of Digital Assets. The Ministry of Digital Development in Kazakhstan accused Coinbase of violating the country’s Law on Digital Assets, which was enacted in February 2023.
Coinbase is not the only major international cryptocurrency exchange facing access restrictions within Kazakhstan. Reports from September highlighted difficulties accessing not only Coinbase but also other exchanges like Kraken from local IP addresses. These restrictions have made it challenging for cryptocurrency users in the country. While several other crypto exchanges have received licenses to operate in Kazakhstan within the Astana International Financial Center (AIFC), Coinbase, Kraken, and others have not been granted the same privilege. This disparity has created significant obstacles for the use of cryptocurrency in the country.
Kazakhstan has adopted a rigorous regulatory approach to cryptocurrencies, including the cryptocurrency mining sector. The country is known for being one of the largest cryptocurrency mining operators in the world. In October, eight major cryptocurrency mining operators in Kazakhstan expressed their concerns to President Kassym-Jomart Tokayev through an open letter. These concerns focused on high energy prices for miners and the challenging conditions faced by the crypto-mining industry in the country.
According to the Law on Digital Assets in Kazakhstan, issued in February 2023, Coinbase’s cryptocurrency trading activities were deemed to contradict Article 11, Clause 5 of the law. This particular clause prohibits the issuance and trading of digital currencies without a national license. As a result of this alleged violation, the Ministry of Digital Development submitted a request to the Ministry of Information to limit access to Coinbase. The subsequent blocking of the exchange’s website in Kazakhstan was done under the provisions of the Communications Act, which empowers internet service providers to restrict access to websites hosting prohibited content.
Both local and foreign companies operating within the Astana International Financial Center (AIFC) in Kazakhstan have the opportunity to obtain a license, allowing them to provide FinTech and RegTech services without immediate full compliance with all regulatory requirements. Companies wishing to register in the AIFC must submit an initial application outlining their project’s development concept. 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 blocking of foreign brokers and cryptocurrency exchanges in Kazakhstan has raised concerns among cryptocurrency users in the country. Websites belonging to these entities were reported to be inaccessible without the use of a VPN. It is worth noting that Interactive Brokers was still providing services to users in Kazakhstan during this period. The restrictions imposed by the government may hinder the adoption and growth of cryptocurrency in the country, potentially limiting opportunities for innovation and financial inclusion.
The Republic of Kazakhstan’s decision to block access to the Coinbase website is rooted in the alleged violations of the country’s new digital assets law. By enforcing strict regulations on cryptocurrency exchanges and mining, Kazakhstan aims to establish a regulated and transparent ecosystem. However, these measures have also created barriers for cryptocurrency users and limited the growth of the industry within the country. As the global cryptocurrency landscape continues to evolve, it remains to be seen how Kazakhstan will adapt its regulatory framework to promote the development of blockchain technology and digital assets while ensuring compliance and protecting investors.
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