New laws proposed in the Parliament of Kazakhstan will only allow authorized miners to mint digital currencies if passed. The draft aims to comprehensively regulate the industry and reduce what its sponsors call uncontrolled power consumption in the industry.
Lawmakers in Kazakhstan propose crypto mining law, trying to curb “grey” mining
Members of the Mazhilis, the lower house of Kazakhstan’s parliament, have introduced a new bill introducing rules for cryptocurrency extraction in the country. According to its regulations, only companies registered with the Astana International Financial Center (AIFC) or non-resident entities that have agreements with licensed data centers are allowed to mine digital coins.
Kazakhstan has become a magnet for crypto miners following China’s crackdown on the industry, and the influx of mining companies has fueled a growing energy deficit. AIFC, the financial hub of the Central Asian nation, is at the center of the government’s efforts to oversee the country’s growing crypto sector. Earlier this year, exchanges registered there were allowed to open accounts with local banks.
The current process for notifying authorities of mining activity is voluntary, crypto news outlet Forklog noted in a report on the attempted legislation. The process is regulated by a regulation of the Minister for Digital Development. Only a third of all mining companies operating in Kazakhstan have registered, said MP Ekaterina Smyshlyaeva.
“The uncontrolled use of electricity by ‘grey’ miners poses a threat to Kazakhstan’s energy security,” the lawmaker stressed. Smyshlyaeva added that the current legislation does not regulate the mechanism for selling the mined cryptocurrency, nor the role of local financial service providers and the circulation of digital assets. “The procedure for their manufacture and the establishment of ownership rights over them are regulated only at the sub-statutory level,” she explained.
According to data from the State Finance Committee of Kazakhstan, the contributions of crypto mining companies to the state budget in the first quarter of 2022 amounted to $1.5 million. In July, President Kassym-Jomart Tokayev signed a law amending the country’s tax code to introduce higher tax rates on crypto miners. The levies now depend on the amount and average price of electricity consumed for minting Bitcoin and other cryptocurrencies.
Do you expect the new law will reduce the number of companies authorized to mine cryptocurrencies in Kazakhstan? Tell us in the comment section below.
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