Cryptocurrency miners in Kazakhstan will be required to convert up to three-quarters of their income on local registered exchanges, according to new legislation moving forward in the country’s legislature. Lawmakers also want to make sure crypto firms pay taxes and fees.
Kazakhstan’s parliament will vote on a bill regulating the activities of crypto miners and exchanges
A draft law designed to create a regulatory framework for both the production and distribution of digital assets in Kazakhstan has been approved after its first reading in Mazhili. The bill and other annexes were prepared at the request of Kazakhstan’s President, Kasim Jomart Tokayev, and were recently submitted to the lower house of parliament.
One of the main objectives of the bill is to establish rules for the operation of licensed cryptocurrency exchanges, a new type of financial institution in Kazakhstan. To support these trading platforms, the government plans to require crypto miners to exchange up to 75% of their revenues starting in 2024.
The authorities also want mining pools to pay taxes on their profits and exchanges to pay fees. The bill’s authors also intend to impose a corporate tax on crypto companies. Currently, mining companies must pay tax only on the electricity they use, at a rate based on the amount and price of energy consumed to mint digital coins.
With subsidized electricity rates, Kazakhstan attracted many mining companies when China cracked down on business in 2021. However, the influx of miners led to the shutdown of crypto farms, causing a growing power shortage and the breakdown of the country’s aging infrastructure. The Central Asian country was forced to impose a levy and import power from neighboring Russia.
As Ekaterina Smyshlyaeva, a member of the Mazhilis Committee for Economic Reforms and Regional Development, indicated, the introduction of a legal mechanism to control electricity use in the sector is another major motivation for sponsoring the draft law. She also stated that the Ministry of Energy will determine energy quotas for the mining industry in order to maintain balance in the country’s energy supply system.
The lawmaker, quoted by Russian news media outlet RBC Crypto, expressed her opinion that Kazakhstan is being used as a “raw material attachment for the blockchain industry.” However, the situation is about to change as a new licensing regime for crypto miners will replace the current voluntary registration. This means that those who want to mine will have to establish a legal entity and be subject to taxation.
“The bill provides a connection between the production and distribution 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.
Do you think that mining companies will be forced to leave Kazakhstan due to increased regulation and tax burden? Share your expectations about the future of the country’s mining industry in the comments section below.
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