The Ministry of Culture and Information of the Republic of Kazakhstan has officially confirmed the blocking of Coinbase’s website in the country, citing violations of the new digital assets law enacted in February 2023. The move follows reports of access difficulties to Coinbase and other major international cryptocurrency exchanges, including Kraken, from local IP addresses in September.
The Ministry has accused Coinbase of violating Article 11, Clause 5 of the Law on Digital Assets, which prohibits the issuance and trading of digital currencies without a national licence. The ministry submitted a request to the Ministry of Information, leading to the blockage of Coinbase’s website under the provisions of the Communications Act.
While several other crypto exchanges have received licences to operate within the Astana International Financial Center (AIFC), including Binance, CaspianEx, Biteeu, ATAIX, Upbit, Signal MT, and Bybit, Coinbase, along with Kraken and other international exchanges, have faced restrictions. Kazakhstan has been implementing stricter regulations on foreign brokers and cryptocurrency exchanges, restricting access to most of them without the use of a VPN.
Local and foreign companies in Kazakhstan can obtain a licence to operate within the AIFC, providing FinTech and RegTech services with an initial application outlining the project’s development concept. Binance, for example, has partnered with a local bank in Kazakhstan and actively supports the development of legislative frameworks for crypto assets in the country.
The recent regulatory actions have prompted discussions and concerns within the financial community, with experts questioning the broadness and potential errors in these measures.
The government’s actions extend beyond Coinbase, with Interactive Brokers and NYMEX websites also being blocked. Interactive Brokers faced scrutiny for potentially fraudulent activities, while NYMEX’s offering of cryptocurrency futures outside AIFC jurisdiction led to its restriction. After requests from the Financial Monitoring Agency, both companies’ websites were unblocked, sparking discussions and concerns among local and foreign companies about Kazakhstan’s regulatory stance on cryptocurrencies and foreign financial services providers.
Kazakhstan’s strict regulatory stance also extends to its cryptocurrency mining sector, one of the largest globally. The government has implemented regulations to manage energy consumption by cryptocurrency miners. The impact of these regulatory measures on digital asset exchanges and brokers operating in the country continues to be a subject of interest and discussion.