Kazakhstan Blocks Coinbase, Citing Digital Asset Law
Zach Anderson Nov 08, 2023 09:09
Kazakhstan's Ministry of Culture and Information has blocked Coinbase due to legal conflicts with digital asset regulations, revisiting previous restrictions on other financial platforms.
Kazakhstan's Ministry of Culture and Information has clarified its decision to block the global cryptocurrency exchange, Coinbase, within the nation's borders. The ministry asserts that the trading of cryptocurrencies on Coinbase is in direct violation of the Kazakhstani law on Digital Assets. This clarification was provided in response to an inquiry from "Kursiv," following a request from the Ministry of Digital Development, Innovations, and Aerospace Industry. The request was made to block access to Coinbase, which contravened section 5 of Article 11 of the country’s Digital Assets Law.
This particular section of the law prohibits the issuance and trading of unsecured digital assets, as well as the operations of cryptocurrency exchanges dealing with such assets, outside of the Astana International Financial Centre (AIFC). Only a select group of cryptocurrency exchanges, including Binance and Bybit among others, are licensed to operate in Kazakhstan, with the AIFC's Committee for Regulation of Financial Services being the authorizing body.
The move to block Coinbase was in accordance with the nation's communication laws that oblige providers to limit access to websites containing prohibited content. This has raised questions about the regulatory environment for digital assets within Kazakhstan and the implications for global cryptocurrency operations.
The Ministry also addressed the earlier blocks imposed on the websites of Interactive Brokers and the New York Mercantile Exchange (NYMEX), both of which were subsequently lifted. The restoration of access to these sites occurred after significant feedback from the financial community and a request from the Financial Monitoring Agency to resume access to www.interactivebrokers.com.
The AIFC offers a unique regulatory sandbox environment, allowing both local and international companies to apply for operation within the center with minimal initial resources. These companies can offer FinTech and RegTech services, with the opportunity to develop regulatory requirements in collaboration with the AFSA. The reinstatement of access to Interactive Brokers and NYMEX, despite their previous infractions, signifies the delicate balance Kazakhstan seeks to maintain between stringent financial regulations and the fostering of an innovative financial technology ecosystem.
In an unrelated but simultaneous report, the FINANCE.kz telegram channel first highlighted the widespread blocking of foreign brokers and cryptocurrency exchanges in Kazakhstan on September 14. This has been a topic of heated discussion among financial analysts, with some, like Rasul Rysmambetov, calling it an "absolute mistake" attributable to potential technical errors.
Interactive Brokers, a major U.S. brokerage firm, and NYMEX, a primary American futures exchange, both now have restored access in Kazakhstan. Interactive Brokers is known for its extensive electronic trading platform in the U.S., while NYMEX holds a prominent position in crude oil futures trading.
Image source: Shutterstock