Kazakhstan To Ban Cryptocurrency Despite Warnings It Could Harm Economy

Officials from Kazakhstan have announced that the central government in Astana will ban all activity related to digital currencies, claiming that doing so will minimize risks to the Caspian and Central Asian country’s national financial market.

“We want to ban purchases and sales of cryptocurrencies using our national currency, as well as to suppress activities of stock exchanges in this segment and any kinds of mining,” Daniyar Akishev, Governor of the state-owned National Bank of Kazakhstan (NBK), told Russia’s RIA Novosti last week.

As the country’s sole financial authority backed by the government, the NBK believes that cryptocurrencies are causing several problems, including fraud or unfair practices that affect consumers. In addition, cryptocurrencies are ideal for those who are engaged in illegal activities, according to Akishev.

“Cryptocurrencies are a perfect tool for money laundering and tax avoidance,” the head of the bank highlighted.

Financial authorities’ concerns over cryptocurrency are not without precedent. The blockchain technology upon which cryptocurrencies are based are not well understood, and have no centralized management system, such as the Federal Reserve or central bank, that can monitor transactions.

Akishev’s position on cryptocurrencies is supported by most of the country’s government agencies, and representatives of the national bank have already designed a series of appropriate amendments to existing Kazakhstani legislation.

Meanwhile, Kazakhstan’s small cryptocurrency community is worried.

Representatives from the Kazakhstan Blockchain and Cryptocurrency Association believe that the proposed measures “are excessively conservative and are contrary to the world practice.”

“Such an approach can harm the investment attractiveness of the country, and I should also mention the risk of capital outflow to the countries where the attitude towards the Blockchain and crypto technologies is wiser,” said Alan Dordzhiev, president of the association.

Kazakhstan is not the first country that wants to ban cryptocurrency.

After coming into existence in 2009, the world’s most popular cryptocurrency, Bitcoin was ambiguously perceived by a number of states, including South Korea. Earlier this year, officials in Seoul expressed concern over cryptocurrency during an investigation for alleged tax fraud.

While some attempt to fight cryptocurrencies, other say the regulation of this financial segment is technically impossible.

Farkhad Amirbekov, Baku-based economic expert and former General Manager of the Baku Interbank Currency Exchange, believes that cryptocurrency is already “changing the world financial structure and this process will only speed up over time.”

“There are no measures that are able to confront this reality,” Amirbekov told Caspian News.

Despite having experienced sharp growth and drop in recent months, Bitcoin is still in high demand among investors. Bitcoin fell from $13,412.44 to $6,928.85 by the end of the first quarter of 2018, which ended March 31, marking a more than 48 percent decline, according to data from industry website CoinDesk.