According to new legislation passed by the upper house of the country’s national parliament on Monday, crypto businesses in Kazakhstan may soon be subjected to Anti-Money Laundering (AML) regulations, as reported by local news outlet Vlast.
The new law extends the country’s financial monitoring system to cover crypto service providers.
The new legislation would also establish a legal institution of public officials. When a firm launches its cryptocurrency trading service or issues digital assets, it would have to notify the Ministry of Digital Development, Innovation and Aerospace Industry in Kazakhstan. The institution will be in charge of conducting a risk assessment, verifying that Know Your Customer and AML regulations are being followed.
According to Vlast, Senator Olga Perepechina stated that Kazakhstan’s financial monitoring system currently does not cover legal entities that handle digital assets, organize trade or offer services for the conversion of cryptocurrencies into cash, tangible goods and other property.
The senator warned that this lack of oversight enables the rapid spread of money laundering and terrorist financing crimes, as well as the growth of the black market. Cybercriminals, including terrorists, are encouraged to utilize digital assets and electronic methods in their settlements, she warned.
Related: Kazakhstan expects at least $1.5B in economic activity from crypto mining within 5 years
However, the proposal has not yet been approved by the country’s president, Kassym-Jomart Tokayev. Last month, Tokayev called for the “prompt” regulation of another cryptocurrency activity, Bitcoin (BTC) mining, noting the country’s power deficit. The Central Asian nation, which has some of the world’s cheapest electricity, has become a Bitcoin mining hotspot amid an intensified Chinese crackdown.
As reported by Cointelegraph, within five years, Kazakhstan predicts that cryptocurrency mining will contribute at least $1.5 billion to its economy. The country’s current mining hash rate is second in the world after the United States.