The Financial Monitoring Agency (FMA) blocked 980 digital asset exchanges for offering trading services to users in Kazakhstan without the required regulatory nod.
In a Dec 7 press release, the financial regulator revealed that it barred almost 1,000 crypto trading platforms in the country as part of wider efforts to curb unregulated activities in the cryptocurrency industry in a recently passed legislation.
Ruslan Ostroumov, the FMA chairman disclosed at a meeting of the Eurosian Group in China that the country launched nine money laundering investigations to certain crypto firms this year. About $36.7 million is alleged to have been laundered from illegal operations.
This development comes as governments ramp up efforts to protect investors following a rise in money laundering, rug pulls, and bridge hacks. Kazakhstan authorities have made similar attempts including rolling out legislation to prevent an occurrence in the country.
The barred virtual asset exchanges comprise popular and smaller firms while the regulator continues to grant licenses and shut down firms over non-compliance.
Coinbase, an exchange that stressed international expansion plans was blocked in November following an order from government officials. The Ministry of Digital Development accused the company of breaking digital asset laws in its operations.
While Coinbase was barred, other exchanges like Binance, Bybit, Xignal&MT, etc have successfully finalized their regulations to operate freely in the country.
Kazakhstan wants full compliance
Following record digital asset hacks reported in 2022, the infamous collapse of the Terra Network, and the implosion of FTX later in the year, regulators increased efforts to pass local laws to register and ensure full compliance before digital asset services can be rendered while others sought wider regional collaborations.
In February, Kazakhstan passed the Digital Assets Law which prohibits trading and other related activities without the regulatory nod in the form of a national license from The Astana International Financial Center (AIFC), an economic zone in the country.
While the law secured investors and protected users from potential scams, several analysts fear that Kazakhstan has also taken harsh steps that might harm the growth of the wider industry, especially its mining sector.
Miners hurt by new legislation
In February, the President signed a law that limits the amount of electricity used by digital asset miners in the country amid high energy prices causing a strain on the power grid.
The decision was borne out of the excessive energy in the operations of Bitcoin miners, and illegal mining activities as the country looked to propose regulations to govern related activities.
#Kazakhstan‘s energy grid may be struggling to deal with an increase in demand. #BTChttps://t.co/HU4epB6s2M
— Cryptonews.com (@cryptonews) October 23, 2021
Per the law, miners can only utilize energy from the national grid when there is a surplus which will be distributed to licensed operators including some tax adjustments to miners. Miners who deploy renewable energy are exempt from the energy cap.
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