Cryptocurrency miners in Kazakhstan are to be required to convert up to three quarters of their income on locally registered exchanges, according to a new bill that’s advancing in the nation’s legislature. The lawmakers want crypto companies to pay their fees and taxes.
Kazakhstan’s Parliament Vote on the Bill Relating to Crypto Miners and Exchanges
On the first reading of the Mazhilis, a bill that would create a legal framework to regulate the creation and circulation in Kazakhstan of digital assets was approved. The bill and other supporting documents were prepared and submitted recently to the lower house of parliament on request of the country’s president, Kassym-Jomart Tokayev.
One of the main purposes of the legislation is to establish rules for the operation of a new type of financial institution for Kazakhstan — licensed cryptocurrency exchanges. To support these trading platforms the government intends to require cryptocurrency miners to trade up to 75% on them starting in 2024.
Authorities also demand that mining pools pay tax on profits, and that exchanges pay fees. Crypto companies will also be subject to corporate tax by the authors of this bill. Current mining companies are required to tax electricity at rates that vary according to the energy used to create digital coins.
Kazakhstan’s subsidized electricity rate attracted many mining companies when China began to crack down in 2021. But the influx of miners caused a growing power deficit and breakdowns of the country’s aging infrastructure, which led to shutdowns of crypto farms. Central Asian nations were forced to import electricity from Russia and impose the tax.
Ekaterina Shlyaeva of the Mazhilis Committee for Economic Reform and Regional Development indicated that the main motivation for this draft law’s sponsors was to establish legal mechanisms for controlling electricity use in the sector. She also said that the Ministry of Energy will determine energy quotas for mining to maintain the balance of the country’s energy supply system.
Quoted by the Russian news outlet RBC Crypto, the lawmaker expressed her opinion that Kazakhstan is being used as a “raw-material appendage of the blockchain industry.” However, the situation is going to change as a new licensing regime for crypto miners replaces the current voluntary registration. This would mean that miners will have to set up legal entities, and pay taxes.
“The bill provides connection between the production and circulation of digital assets in one ecosystem. At the same time, the activities of miners and mining pools will be regulated and licensed by the Ministry of Digital Development, Innovation and Aerospace Industry,” Ekaterina Smyshlyaeva further explained.
Are you concerned that Kazakhstan’s upcoming tighter regulations will result in mining companies being forced to relocate? Share your expectations about the future of the country’s mining industry in the comments section below.
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