Kazakhstan now offers a comprehensive regulatory environment for cryptocurrency, encouraging applications for Kazakhstan crypto license. Since the Law on Digital Assets became effective on April 1, 2023, it has set the stage for regulated digital asset operations, including issuance and trade, mainly through the Astana International Financial Center (AIFC). Within the AIFC, this legal framework allows for legal cryptocurrency transactions under the Digital Asset Trading Facility License. Importantly, this is subject to companies’ compliance with strict identification and anti-money laundering protocols. Along with ensuring a safe and regulated digital asset market in Kazakhstan, licensed firms can legally provide cryptocurrency buying, selling, and payment services under the close supervision of the Astana Financial Services Authority (AFSA).
Benefits of a Crypto License in Kazakhstan
Efficient registration for foreign nationals
Easy and fast entry for foreign professionals is due to the fact that AIFC simplifies the process of obtaining visas and work permits with the support of a specialized Expat Center offering more than 500 services.
Favorable tax regime
Promoting the development of investment and financial markets without the burden of additional taxes, as within the AIFC until January 1, 2066, holders of the crypto license Kazakhstan enjoy benefits for certain income and property.
Reliable legal framework
A strong and stable legal framework for cryptocurrencies with minimal changes has been maintained by the country since 2018, and a new law in 2023 is expected to ensure compliance with international standards in the foreseeable future.
Flexible currency transactions
Transactions can be executed in any agreed currency without the usual bureaucratic hurdles since AIFC members are exempt from local currency regulations.
Market security and transparency
Guaranteeing the integrity of the system and legal protection of participants, which AFSA is responsible for ensuring by overseeing financial activities within the AIFC while simplifying interaction with international organizations.
Simplified visa and labor policy
AIFC employees, as well as their families, are exempt from obtaining work permits and special visa regime for up to 5 years, attracting the best global talent to the financial sector.
Regulatory Evolution of Cryptocurrency Exchanges in Kazakhstan
Kazakhstan has made significant progress in regulating cryptocurrency activities, as evidenced by the introduction of a special Kazakhstan cryptocurrency license.
Legislative milestones
Legislative updates in 2018, namely the Law on Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Financial Regulation, including the Law on the Securities Market and the laws on the National Bank.
The Law on Digital Financial Assets of 2020 — directly addresses the regulation, use, and supervision of digital financial assets, including cryptocurrencies.
Regulatory authorities and licensing
The National Bank, as the primary regulator, was responsible for regulating the crypto market, focusing on compliance with anti-money laundering, counter-terrorist financing, and safe custody requirements.
The Ministry of Licensing of Digital Technologies (effective April 1, 2023) now issues cryptocurrency licenses, allowing legal cryptocurrency transactions within the Astana International Financial Center (AIFC).
Astana International Financial Center (AIFC)
With a special legal regime located in Nur-Sultan, the AIFC operates under constitutional law, providing a unique regulatory environment for financial services.
As the independent regulator of the AIFC since January 1, 2018, AFSA oversees the financial, ancillary, and capital market services within the center.
Membership and compliance
Legal entities must have a physical presence in the AIFC in order to provide services in Kazakhstan and abroad in compliance with the requirements of the FSA and international law.
The AFSA ensures that members, their directors, and key employees comply with legal requirements and has the authority to enforce rules to maintain market integrity.
Cryptocurrency License in Kazakhstan and Hong Kong
When aiming to obtain crypto exchange license in Kazakhstan, you need to take care of compliance with financial, personnel, and operational requirements. These include the establishment of a legal entity, opening bank accounts, sufficient share capital, and the appointment of key officials. In addition, there are obligations to implement internal policies, cybersecurity measures, and a digital platform for customer and transaction verification.
Cryptocurrency exchanges in Hong Kong are licensed by the Securities and Futures Commission (SFC), whose rules require strict compliance for virtual asset service providers. In addition, unlicensed transactions are prohibited, and the need to comply with regulatory standards in the provision of regulations, including the protection of client assets, is emphasized.
Requirements
Securing a Kazakhstan cryptocurrency exchange license involves a series of regulatory steps and compliance measures.
Legal and Financial Setup
- Incorporate a legal entity within the AIFC.
- Open a business bank account in Kazakhstan and secure a local legal address.
- Allocate an amount equal to six months of operating expenses to the company’s share capital.
Human Resource Requirements
Must appoint a Senior Executive Officer, Finance Officer, Chief Technology Officer, and Director. Applicants can self-appoint if qualified; no residency is required.
AML and Compliance Staffing
Hire local employees for Anti Money Laundering Officer and Compliance Officer roles, which may later need to be distinct individuals per regulatory guidance.
Operational and Cybersecurity Measures
- Develop rules that comply with International Finance Commission standards for crypto exchanges.
- Implement measures to safeguard against cyber threats.
- Create documents outlining business processes, including financial projections for three years and an exit strategy.
- Establish a platform for customer identification and suspicious transaction monitoring.
Legal and Regulatory Compliance
- Provide proof of the legal origin of funds.
- Implement KYC, CFT, and AML procedures as per Kazakhstan‘s legislation No. 191-IV “On Counteracting Money Laundering and Terrorist Financing”.
- Conduct regular reporting to the AFSA and annual audits for compliance.
AIFC Registration Documentation
- A description of the company’s intended activities.
- Proof of payment of USD 300.
- Business Plan and Financial Plan detailing expected income and expenses.
- Individual Identification Number (IIN) for the director and passports for all members.
- Lease agreement for an AIFC territory premise to serve as the company’s registered address.
These guidelines are dictated by Articles 8, 10, 11 of Law No. 193-VII RK Law “On digital assets in the Republic of Kazakhstan” and are enforced by the Astana Financial Services Authority (AFSA).
The Process of Obtaining a Crypto Exchange License in Kazakhstan
Stage 1. Preliminary Document Collection
- Company name preference.
- Passport and utility bill copies for all shareholders and directors.
- CVs of shareholders and directors.
- Business model or plan.
- One-year financial plan.
Stage 2. Licensing Process
- Identify the appropriate license type.
- Prepare and submit documentation to AFSA.
- Engage in communication with AFSA for any further information or documentation.
- Await cryptocurrency license Kazakhstan approval.
Stage 3. Company Registration
- Complete the company registration.
- Prepare corporate documents.
- Hire local staff.
- Establish accounting services.
Stage 4. Corporate Account Opening
- Analyze suitable Banks/EMIs and compare risk appetites based on AML policies.
- Collect necessary documents for the account opening process (e.g., the flow of funds, source of wealth, account purpose, key partners, company website, utility bill).
- Guide through the account opening process.
Kazakhstan’s Cryptocurrency Taxation
Taxation in Kazakhstan is governed by the Tax Code with provisions for the Astana International Financial Center (AIFC). There are exceptional cases specified in the Constitutional Law “On Astana International Financial Center.” In addition, there are certain tax benefits that can be used by holders of the Kazakhstan crypto exchange license and provide financial services within the AMFC. Key aspects:
- Exemption from corporate income tax (CIT) and value added tax (VAT) for AIFC financial service providers that hold the required license from the FSA.
- Income taxation is imposed on income from the provision of certain services (legal, audit, accounting, consulting) to AIFC entities, as well as on certain income from the provision of financial services in accordance with the AIFC rules.
- AIFC participants must follow special accounting rules to distinguish between tax-exempt and taxable income and deductible expenses to ensure compliance with income tax requirements.
- Property and land within the AIFC are taxable for participants providing financial and support services following the Constitutional Law.
- Foreign employees working in the financial or support sectors of the AIFC are exempt from income tax on income derived from the AIFC as specified in the Constitutional Law.
FAQ
How Do You Get a Cryptocurrency License in Kazakhstan?
Submit an application with relevant documents and a business plan to the AFSA under the AIFC, ensuring you meet all legal requirements.
What License Is Needed for a Crypto Exchange in Kazakhstan?
A specific “Operating a Digital Asset Trading Facility and Providing Custody” license from the AIFC is required for crypto exchange operations.
How Much Is a Cryptocurrency License in Kazakhstan?
The fee for an “Operating a Digital Asset Trading Facility” license is $70,000, potentially reduced to $7,000, plus an annual $35,000 renewal fee, which can be reduced to $3,500.
What Is the Duration of a Cryptocurrency License in Kazakhstan?
The cryptocurrency license Kazakhstan is valid for two years, with an annual renewal required thereafter.
