Licensed crypto currency exchanges eye to operate in Kazakhstan

By Trend

Several cryptocurrency exchanges are finishing preparations for work at AIFC Astana International Financial Centre, Director of Fintech department at the AFSA Astana Financial Services Authority Yagub Zamanov told Trend.

AFSA licensed 6 AIFC companies to provide financial services for managing the digital assets platform (crypto exchanges). Three of these companies have been licensed since March 2022.

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

This includes, for example, establishing relationships with banks to integrate systems, as well as meeting requirements to ensure minimum regulatory capital, ensuring requirements to protect retail investors and cyber security requirements.

In general, the requirement of AIFC's pilot project on the interaction of Kazakh banks and crypto exchanges are aimed at ensuring the sustainable development and functioning of the digital asset market, reducing risks, and consist in providing crypto exchanges with the following key measures (but not limited to them):

- 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.