Kazakhstan May Create Special Fund to Store Confiscated Cryptocurrency

Majilis deputy Olzhas Kuspekov has proposed the creation of a state reserve to store confiscated digital assets, citing significant gaps in Kazakhstan’s regulation of cryptocurrencies, Orda.kz reports.

In his parliamentary request, Kuspekov pointed out that Kazakhstan currently lacks a clear legal and technical framework for handling crypto assets seized in criminal cases.

The absence of proper legal and technical mechanisms creates risks of loss, theft, and legalization of assets through third parties, the deputy warned 

He recommended establishing a state digital reserve under the National Bank to securely store confiscated cryptocurrency.

Kuspekov also raised concerns about the growing involvement of young people in the shadow crypto market, driven by influencers and so-called “crypto coaches.”

These individuals, without licenses, promote illegal platforms by promising guaranteed returns, thereby violating the law. We must introduce the concept of ‘investment coaching’ into legislation and require mandatory licensing for such activities, along with a mechanism to block violators’ accounts, he said. 

He added that some second-tier banks are facilitating crypto transactions outside the legal framework.

According to the Financial Monitoring Agency, over 4.2 billion tenge in transactions were processed through accounts at ten different banks. In most cases, internal compliance controls were not applied. It is necessary to conduct a transfer audit and strengthen oversight of bank compliance,Kuspekov stated. 

Despite an official ban, unlicensed crypto exchanges continue to operate in Kazakhstan. They remain accessible through the App Store and Google Play, are openly advertised, and often appear at public events and across social media platforms.

Citing data from Chainalysis, Kuspekov noted that 86.2% of crypto turnover in Kazakhstan in 2023 — equivalent to $3.5 billion of the $4.1 billion total — passed through illegal channels.

To combat this, he proposed blocking the websites and mobile apps of unlicensed exchanges and publishing an official list of authorized platforms to better inform the public and enforce regulation.

Original Author: Zhadra Zhulmukhametova