Kazakhstan crypto market: between crackdowns and legalization

While the Kazakh market processes the scale of the crackdowns (over a hundred cryptocurrency services were shut down), the largest legal operators are already offering unexpected solutions (such as WhiteBIT, which openly stands ready to help the government and even competitors enter the legal field).

GNcrypto journalists spoke with representatives of Kazakhstan’s crypto industry. They discussed why the closure of illegal platforms is called a “necessary market cleansing,” how to bring 90% of Kazakhstan’s crypto turnover out of the shadows, and why some operators are ready to share their compliance technologies with banks and regulators.

Strike against “bad actors” or against the entire industry?

Recent regulatory actions are viewed by legal participants not as a threat to the industry but as an important signal about the need for market cleansing. Among the 130 closed exchanges, only a small portion served the audience of major licensed platforms.

Most of the closed services were unofficial, little-known, or speculative exchanges rather than full-fledged exchanges with institutional infrastructure.

According to market participants, interest in digital assets in Kazakhstan is growing, but only 5-10% of turnover occurs in the legal field. Accordingly, the main task now is to bring the lion’s share of digital asset transactions out of the shadows. Market participants argue that not everyone trying to build a crypto business should be prosecuted – they need to be directed into the legal field with high control ensured.

$16.7 million in confiscated funds: whose money is it?

Reports of $16.7 million in confiscated assets raise questions: are these truly criminal funds or could ordinary users have been affected? Has a mechanism for returning funds to law-abiding clients been developed?

Industry representatives note that precise information about each case’s status is the prerogative of law enforcement. Most likely, the majority are funds connected to illegal activity: money laundering, fraud, transfer of proceeds from shadow schemes.

Could ordinary users have been affected? This is possible, especially if someone didn’t understand the risks and transferred funds through unverified platforms.

Those working with law enforcement report that the actual criminal turnover in Kazakhstan is much larger, and the confiscated funds represent only a small portion of it. Monthly reports emerge about financial pyramids and hundreds of victims.

Confiscated assets could indeed include funds from ordinary law-abiding citizens. Moreover, there were quite a few criminal cases where regular users didn’t even know they were conducting illegal operations. Unfortunately, time is needed to correct all of this.

As for the return mechanism, ideally regulators should provide for a verification and return procedure for those who can prove the legality of their funds’ origin and absence of connection to prohibited schemes. Implementing this is challenging, but some market participants say such mechanisms have been developed.

$43 million: reality or inflated figures?

The press reported “identifying 81 organizations with $43 million in turnover.” Are such confiscations realistic, or are authorities exaggerating the scale of the “gray” market?

Such reports often use an assessment approach: analysis of blockchain transactions, suspicious addresses, aggregated data from P2P platforms and exchanges. Thus, the figures may reflect the aggregate turnover of suspicious companies rather than their net profits.

Such information can be taken out of context when it concerns so-called cash-out groups. The figures are significant, reflecting the size of the shadow portion of the economy.

The price of legality

Speaking about the local AFSA license – how much does it cost? What are the costs of obtaining and maintaining this license?

The AFSA license is essentially an entry ticket to the legal field. The registration fee itself is relatively low – around several hundred dollars. However, the main expenses go toward creating infrastructure: KYC/AML policies, internal control, information security, legal support, and audits. In total, this already amounts to tens of thousands of dollars. Additionally, legal participants pay annual supervisory fees (about $25,000 per year).

The license typically takes six to nine months to obtain, though in practice it may take longer.

Significant costs also include deployed human resources, technical development, and direct contracts with international providers of KYC, KYT, Travel Rule, and IT process architecture. This can run into millions of dollars. In fact, expenses in the Kazakh market are at the level of European regulation and, unfortunately, more expensive than neighboring countries.

Major operators in the registration process say they are adapting their solutions to local market conditions.

Biometrics from 2026: the end of privacy?

Kazakhstan is introducing biometric identification for all cash transactions starting in 2026. How will this affect business? Are operators concerned about user exodus among those who value privacy?

According to available data, there are indeed plans to introduce biometric identification in certain areas of financial operations, including cash transactions. However, there may be advantages to this. For example, biometric identification can strengthen trust in platforms, facilitate KYC/AML, and simplify fraud protection.

Similar measures already exist today – transactions exceeding 2 million tenge ($4,000) are subject to checks. And regulators are gradually lowering this threshold.

There are risks. After all, in order to capture a small portion of illegal operations, authorities affect ordinary users and complicate user experience.

Major licensed platforms already conduct each user through biometric identification before allowing them to trade.

According to some participants, the government presents itself as a business partner, but partnership requires mutual contributions. For now, however, the government often offers nothing beyond restrictive or coercive measures.

There’s also absurdity. For example, crypto exchanges are required to report threshold transactions of 5 million tenge ($9,000) to the Financial Monitoring Agency. Moreover, this regulation’s wording can be interpreted to require operators to report simple user transfers between main and trading balances. This creates unnecessary technical burden on systems.

KZTE: ally or competitor?

Kazakhstan is preparing to launch the national stablecoin KZTE. Is this an ally or competitor for the blockchain community? Will operators be required to list KZTE?

Many market participants see the national stablecoin as a step to increase trust in the digital economy. Such a coin can increase overall trust in the digital economy, reduce friction between fiat and crypto instruments, and stimulate infrastructure integration. With proper implementation, it will work as a bridge rather than a replacement.

The key is for regulators to choose a balanced approach rather than dominance.

Kazakhstan is one of the first countries actively pursuing CBDC launch. Experts believe this will initially provide a certain boost toward developing “fiat-crypto” solutions and crypto payments for business. Major platforms plan to list KZTE and provide users access to it. Some operators are also considering their own stablecoin in the near future, given the experience of European teams and Kazakhstan’s investment attractiveness.

Banks versus crypto exchanges: who controls the money?

The requirement to integrate with local banks raises questions – who actually controls the funds? Have there been cases where banks blocked legitimate transactions from crypto exchange clients?

The requirement for fiat transfers through banks is a logical regulatory step aimed at ensuring control, transparency, and compliance with AML/CTF standards. But, of course, this imposes significant operational restrictions and creates “bottlenecks.”

Three key problems can be identified:

• Banks are not yet ready to work with crypto exchanges and lack sufficient tools
• Bank compliance is unfamiliar with what checks are conducted on the exchange side and their depth
• Difficulties arise with correspondent banks, among which there’s also wariness toward the industry

Currently, Kazakhstan has underdeveloped fiat gateways due to restrictions on working with payment organizations. International payment systems Visa/Mastercard are very cautious and require banks to meet certain standards and obtain additional licenses to service crypto exchanges in terms of acquiring.

Legal operators are extremely dissatisfied with current fiat solutions in the market. Additionally, the National Bank introduced mandatory confirmation of fund origin for fiat payments from $1,000.

However, some major players offer a solution: build a unified channel where banks, exchanges, and regulators can access necessary information at any stage of payment processing. Individual operators (such as WhiteBIT Kazakhstan) approach banks with proposals to strengthen their compliance services, as they possess experience, infrastructure, and willingness to share technologies. Moreover, some are ready to do this absolutely free of charge.

Will there be another wave of crackdowns?

Crypto activity in Kazakhstan continues to grow. Do legal operators feel pressure from regulators despite having licenses?

Market participants see the mass closure of cryptocurrency exchange centers as the start of more intensive supervision. In many jurisdictions, including Kazakhstan, such initial “cleansing” is a signal to the market: “Look what happens to those outside the rules.” After this, more targeted inspections, transaction monitoring, selective audits, and platform behavior monitoring begin.

Market participants note that many processes in Kazakhstan proceed this way: as soon as the “temperature rises,” government agencies demonstrate their capability and strength.

The legal market is ready for dialogue, open to cooperation with regulators, ready to share technologies. It remains to be seen whether the government is prepared for partnership with the industry. Will tightening control remain the only management recipe?

Earlier, we also received commentary on the situation with cryptocurrency platform closures in Kazakhstan from Dauren Karashev, head of the National Blockchain Association.