Here’s how Kazakhstan intends to improve its legacy crypto trading framework

Kazakhstan, one of the world’s largest Bitcoin (BTC) mining destinations, has issued a consultation document to gauge public interest in proposed amendments to improve the cryptocurrency trading framework.

The policy document, published on January 27, was prepared by the Astana Financial Services Authority (AFSA), Kazakhstan’s regulator. AFSA noted that the regulatory framework of the Digital Asset Trading Facility (DATF) of the Astana International Financial Center dates back to 2018 and that the amendments seek to introduce certain improvements.

The AFSA analysis highlighted the problems associated with the ongoing oversight of crypto exchanges, revealing “contradictions, ineffective provisions and uncertain definitions within the regime”. The introduction of measures to reduce risk on several fronts, including governance, illicit activity, safekeeping of client funds and settlement, was recommended.

Regarding the restructuring of the DATF framework, the document recommended three options — retaining the existing framework, developing a stand-alone DATF framework, and treating crypto exchanges as a multilateral trading system.

AFSA believes that the policy recommendations will bring several improvements, including reducing the risks associated with crypto operations and the industry in general. In addition, the improvements will address contradictions and unclear provisions in the existing framework. The final outcome, which AFSA expects, is to create a favorable regime for crypto exchanges while encouraging innovation.

According to the policy document, the proposed measures will have a positive effect on the crypto trading industry:

“Together, this will help create a clearer, more appropriate, efficient, detailed and balanced AIFC DATF framework with high standards for consumer protection, without hindering the development of crypto exchanges.”

Finally, the document revealed that the review of the DATF framework is aligned with the “AFSA’s Strategy for 2022” initiative, where the development of a “digital asset framework: crypto exchanges, STO and DASP” is one of the three key regulatory development objectives.

Related: Kazakhstan poised to legalize crypto as Russians flock to country

On the other side of the spectrum, the Central Bank of Kazakhstan has recommended launching an internal central bank digital currency (CBDC) in 2023, with a gradual expansion of functionality and introduction into commercial operation by the end of 2025.

In October 2022, Binance CEO Changpeng “CZ” Zhao revealed that Kazakhstan’s CBDC will be integrated with BNB Chain, the blockchain built by the crypto exchange.