Licensed crypto exchanges to start operating in Kazakhstan soon

A number of crypto exchanges are completing preparations for the beginning of work in the Astana International Financial Centre (AIFC).

Director of the Financial Technology Department of the AIFC Committee for Regulation of Financial Services (AFSA) Yagub Zamanov made the announcement in an interview with Trend.

The AFSA has already licensed six AIFC companies to provide financial services for the management of a platform of digital assets (cryptocurrency). Three of these companies have been licensed since March 2022.

Currently, most crypto-exchanges are completing preparatory work related to the additional requirements and conditions established by "The rules of interaction between the AIFC crypto exchanges and Kazakhstan's second-tier banks (STBs)".

For example, this is the establishment of relationships with banks to integrate systems, as well as the implementation of requirements to ensure minimum regulatory capital, meeting the requirements for the protection of retail investors and cybersecurity requirements.

In general, the requirements of the AIFC's Financial Technology Rules and the Pilot Project are aimed at ensuring the sustainable development and functioning of the digital asset market, reducing risks, and consist of (but are not limited to) the following key measures for cryptocurrencies:

- Preventing the use of crypto exchanges for the purposes of money laundering and terrorist financing. For these purposes, crypto exchanges are required to provide the following key control systems: the first is the "know your customer" procedure and the second is the "know your transaction" procedure. That is, crypto exchanges carry out identification and proper verification not only of each client, but also verification of the client's personal digital wallet and transaction history for signs of violation of the requirements of the legislation on countering the legalization (laundering) of proceeds from crime and the financing of terrorism (AML/CFT).

- The guarantees of financial stability of crypto exchanges and minimum guarantees regarding the rights of investors. The rules of the pilot project establish requirements for the availability and maintenance of a minimum regulatory capital, which should primarily cover losses in the event of loss of digital assets, for example, as a result of cyber attacks on the crypto exchange.

- Protection of the interests of retail investors. The pilot project provides the following measures to ensure the protection of the interests of the most vulnerable category – retail investors: investment limits for retail investors in the amount of $ 1,000 per month (or a large amount when income is confirmed), testing (or classification) of clients to obtain the status of a qualified/professional investor, storage of digital assets in "cold wallets".

- Additional investor protection measures. The regulatory environment of the AIFC ensures the protection of the interests of all categories of investors by the following measures: maintaining the adequacy of regulatory capital, disclosure of the general risks of digital assets in general and for each digital asset separately, approval of each type of digital asset by crypto exchanges and AFSA before allowing it to be traded on the crypto exchange platform.