Kazakhstan’s Ministry of Culture and Information has formally declared that the Coinbase website is blocked in the country, in accordance with the Law on Digital Assets legislation that was passed in February.
According to local news outlets, the development comes after laws banning the issuing and trade of unsecured digital currencies were put into effect.
Accusation of Regulatory Violation
As early as September, local IP addresses were blocked from accessing Coinbase by Kazakhstani authorities. The Ministry of Digital Development requested that the measure be taken, and it was. Access to Coinbase was restricted after the Ministry of Digital Development accused the company of breaking the Law on Digital Assets.
The Law on Digital Assets, which was first proposed in 2023, makes it illegal to issue and distribute unsecured digital assets. Within the Astana International Financial Center (AIFC), a designated economic zone in Kazakhstan, there is an exception to this provision. The Astana Financial Services Authority offers licenses to run cryptocurrency trading platforms inside the AIFC (AFSA).
Several cryptocurrency exchanges have already received approval from the AFSA. Notable names among these approved exchanges include Binance, Bybit, CaspianEx, Biteeu, ATAIX, Upbit and Xignal&MT.
The Coinbase website was first reported to be having access problems in September. Finance.kz, a local Telegram media organization, referred to Coinbase as the “great Kazakh investment firewall.” This was not just a Coinbase barrier. Access to other significant international cryptocurrency exchanges, like Kraken, was also impacted.
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Stringent Regulation
Kazakhstan has adopted a very strict stance when it comes to regulating cryptocurrencies, especially when it comes to its substantial mining industry, which is one of the biggest in the world. Eight of the top cryptocurrency miners expressed their concerns about the difficult circumstances the business faces in an open letter to President Kassym-Jomart Tokayev in October.
BCD Company, TT Tech Limited, Green Power Solution, Kinur Invest, KZ Systems, AI Solutions, and VerCom were among those organizations. One major problem mentioned was the high cost of electricity for miners, which resulted in a “very distressful situation” in the sector.
In Kazakhstan mining got off to a bad start. There was an abrupt inflow of miners into Kazakhstan after May 2021, when China outlawed cryptocurrency mining. The unplanned nature of that development resulted in significant strain on the nation’s electrical grid. Consequently, there were blackouts.
Although Coinbase is disappointed about this situation in Kazakhstan, the company has seen more successful outcomes elsewhere. Information about the U.S. cryptocurrency exchange surpassing Q3 revenue projections surfaced last week. Having said that, it was also revealed that trade volumes on the exchange had decreased for the second straight quarter.
The decision by Kazakhstan to restrict access to Coinbase demonstrates the nation’s commitment to upholding its laws governing digital assets and is part of a global trend where governments are trying to regulate activity related to cryptocurrencies.
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