Kazakhstan Unveils Plan to Become Central Asia's Leading Crypto Hub

Kazakhstan could transform into Central Asia's dominant cryptocurrency hub if proposed regulatory reforms are implemented, according to Kanysh Tuleushin, the country's First Vice Minister of Digital Development, Innovation and Aerospace Industry. In a recent op-ed published in Kazakhstanskaya Pravda newspaper, Tuleushin outlined how lifting current restrictions on digital asset trading nationwide could position Kazakhstan as a regional blockchain leader, competing with neighboring Uzbekistan and Kyrgyzstan. Cointelegraph reports that broader legalization and taxation could generate hundreds of billions in tenge for the national budget.

The minister's proposal comes amid growing cryptocurrency activity in Kazakhstan, which has already established itself as a significant player in the global crypto mining landscape. Statistics show Kazakhstan's crypto mining sector has contributed $34.6 million in taxes over the past three years, with 415,000 mining machines registered and 84 licenses issued since 2023, according to data from the Digital Ministry.

Mining Growth and Energy Infrastructure Plans

Kazakhstan's emergence as a crypto mining hub follows China's crackdown on mining operations in 2021, which drove many miners to relocate to Kazakhstan, attracted by its relatively low electricity costs and favorable climate. However, this influx created significant pressure on the country's energy infrastructure, leading to power shortages.

To address these challenges, Tuleushin has proposed an innovative "70/30" model where foreign investors would fund upgrades to thermal power stations. Under this approach, 70% of new energy capacity would be directed to the national grid while 30% would be allocated for mining operations. Crypto.news notes that this model mirrors similar practices in the United States, where crypto miners help balance power grids by consuming excess electricity during low-demand periods.

The proposal also includes utilizing associated petroleum gas, a byproduct of oil production that is often flared or wasted, to power mining operations. This could provide an environmentally sound solution while capitalizing on otherwise unused energy resources.

Regulatory Framework and AIFC Growth

Central to Kazakhstan's crypto strategy is the Astana International Financial Centre (AIFC), a special economic zone with its own independent legal and regulatory framework established in 2018. The AIFC has become a crucial hub for cryptocurrency activities in the country, with trading volumes on AIFC exchanges surging from $324 million in 2023 to $1.4 billion in 2024.

Currently, regulated crypto trading is restricted to the AIFC. Starting in 2025, miners will be required to sell 75% of their mined assets through AIFC platforms, up from the current 50% requirement, according to a report from the International Monetary Fund.

Despite these regulated channels, experts estimate that total digital asset transaction volume in Kazakhstan reached approximately $4.1 billion in 2023, with 91.5% occurring outside regulated environments. This "gray market" represents both a challenge and an opportunity for authorities seeking to bring cryptocurrency activities under formal oversight.

Regional Competition and Global Positioning

Kazakhstan's ambitions face competition from neighboring countries also vying for crypto prominence in Central Asia. Uzbekistan recently claimed the top spot in the region for crypto adoption, ranking 33rd globally according to the 2024 Global Crypto Adoption Index, as reported by Daryo News.

Uzbekistan has implemented tax incentives for crypto transactions and established licensing requirements for Crypto Asset Service Providers (CASPs). Meanwhile, Kyrgyzstan has also taken steps toward embracing blockchain technology, with Binance signing a memorandum of understanding with the country's National Agency for Investments in May 2025 to introduce crypto payment infrastructure and blockchain education.

Kazakhstan's approach differs from its neighbors through its focus on regulated mining and the development of the AIFC as a regional financial center. Gofaizen Sherle highlights that crypto license holders in Kazakhstan providing financial services within the AIFC are exempt from various income and property taxes until January 1, 2066, creating a long-term incentive for investment.

Context: Kazakhstan's Digital Tenge Project

In parallel with its crypto industry development, Kazakhstan is advancing its central bank digital currency (CBDC), the digital tenge. The project, which officially launched in November 2023, is expected to be fully implemented by 2025. The CBDC has been integrated with major payment networks including Visa and Mastercard, allowing for seamless transactions globally.

According to R3, development of the digital tenge began in February 2023, with the National Payment Corporation (NPC) now leading implementation efforts. The CBDC's programmable nature allows for innovative applications including smart contracts and transparent tracking of public expenditure.

In July 2024, Kazakhstan demonstrated the CBDC's functionality by using programmable digital tenge to pay for a rail line construction project to China, showcasing its practical applications for infrastructure development and cross-border trade.

Related Reading on BTC Peers

Read this article on the Global Bitcoin Policy Index (GBPI)

This comprehensive resource examines how different countries approach Bitcoin regulation and adoption. The index provides valuable insights into global regulatory frameworks, helping investors and industry participants understand how Kazakhstan's policies compare internationally. The GBPI offers data-driven analysis of policy trends that could impact cryptocurrency markets in Central Asia and beyond.