Kazakhstan Shuts Down Nearly 1,000 Non-Licensed Crypto Exchanges and Firms

Stricter Measures on the Horizon

The rise in hacking and theft of digital assets and the series of bankruptcy filings of crypto exchanges and investment companies, such as FTX’s collapse in 2022, are forcing Kazakhstan authorities to reconsider their hands-off approach towards crypto. Efforts have picked up steam in 2023, with a more serious approach to creating a regulatory framework for crypto-oriented businesses.

The most significant step was the introduction of the Digital Assets Law, which banned trading or other related blockchain activities without a license from The Astana International Financial Center. The laws aim to safeguard users and investors from scams, but analysts fear that the stricter measures can stagnate growth, especially in the mining sector of the industry.

Crypto Miners Are Leaving Kazakhstan

One of the most significant changes in the country’s blockchain landscape is the status of crypto miners. Kazakhstan eagerly welcomed miners and crypto companies following China’s 2021 ban. However, the climate is shifting in a different direction in 2023.

Blockchain miners are under pressure after a new law in February 2023 placed limits on electricity usage by blockchain miners. The global energy crisis has increased prices, and the government fears that excessive levels of electricity consumption by illegal miners can create energy shortages.

The decline in mining operations is already becoming evident from a comparison of Kazakhstan’s contribution to the Bitcoin mining hash rate, which in 2021 was at 18% but has gone down to 4% in 2023. Crypto mining firms are migrating to other regions where they will not be burdened with high energy consumption taxes.