Cryptocurrency miners operating in Kazakhstan will now be able to purchase only excess power from a government-controlled market, according to a new Digital Assets Bill. The legislation is aimed to regulate the industry’s activities and to tax its profits.
Law To Regulate Crypto Mining In Kazakhstan, Change Licensing Rules
Kazakhstan’s Lower house of parliament Mazhilis recently passed the bill “On Digital Assets of the Republic of Kazakhstan”. According to local media, four related bills were also adopted, which aim to govern mining and other cryptographic activities.
The legislation states that mining companies in the country will be able to buy power only from the KOREM market, the nation’s centralized electricity marketplace. It was noted that the price restrictions on this excess power have been removed and market mechanisms will be used to oversee the transactions.
The bill also sets up two types of mining licenses. The first one will be provided to entities who operate their own infrastructure, such as data processing centres. They will need to meet safety standards, equipment and location requirements.
The second type will be given to miners who rent space on crypto farms, but don’t claim an electricity fee. Mining Pools have to follow additional rules, such as the requirement to have servers in place and to respect and adhere to local information security regulations.
Kazakhstan has been one of the most popular crypto mining destinations since its inception. In 2021, the government cracked down on the industry and blamed its increasing power deficit on the influx of miners. Under recent agreements with Russia, mining farms in Kazakhstan will also be eligible for Russian electricity.
Cryptocurrency miners will have to pay corporate taxes on the amount of their rewards
The authors of the bill first read it in October. It covers taxation as well. Crypto mining companies will be subjected to corporate income taxes, depending on the amount of digital assets they receive as a reward. The same tax will apply to mining pools, and their commissions will be taxed as well.
The report said that cryptocurrency transactions will lead to the payment of value-added tax (VAT), but it didn’t provide more details or rate information. All entities offering cryptocurrency exchange services have to pay corporate taxes.
Smyshlyaeva also noted that cryptocurrency exchange and circulation is strictly prohibited. In Kazakhstan, only trading platforms registered with the Astana International Financial Center (AIFC) with an issued license, but no tax benefits, are allowed to operate. Other organizations are prohibited from providing such services.
Authorities also plan to ban advertisements for cryptocurrency transactions. On the other hand, different regulations were adopted for collateralized assets. They are similar to those applicable to securities, and it will depend on the availability and quality of collateral to allow such assets to be issued and circulated.
Do you think that Kazakhstan will remain a crypto mining hotspot, even after the new laws come into effect? Let us know in the comments section below.
