What’s the difference between electronic money and the digital tenge? Who will be able to buy crypto assets, when, and how? These and other questions are addressed in an interview with Elena Bakhmutova, Chair of the Board of the Association of Financiers of Kazakhstan (AFK).
— Elena Leonidovna, the draft law on banking currently under discussion contains little detail about digital assets (DAs), even though public interest is quite high. How is the digital asset market expected to be structured?
— The detailed information on DAs is not actually in the banking law itself, but in the accompanying draft law that introduces amendments to other legislative acts. Some of the information is found in the law on payments and payment systems, and some in the laws on the National Bank and digital assets. As you know, the President has instructed to expand the turnover of DAs. In response, the National Bank has proposed its own vision for the development of the DA market within this accompanying draft law. That concept is still under development, has not been finalized, and is currently being discussed.
So, what does the National Bank's vision look like? First, it introduces a fundamental classification: financial digital assets vs. non-financial ones — including so-called unbacked digital assets, i.e., cryptocurrencies.
As you may know, the current law on digital assets did not have this distinction — all DAs were previously categorized as non-financial, and circulation was only allowed within the regulatory framework of the Astana International Financial Centre (AIFC). Secondly, the National Bank will directly regulate the market of digital asset service providers, while the Agency for Regulation and Development of the Financial Market, in coordination with the National Bank, will be in charge of regulating issuance and acquisition of financial digital assets. I believe these changes will significantly impact the entire financial market.
The Central Securities Depository will take on a new role as operator of the financial digital asset platform, and the Kazakhstan Stock Exchange (KASE) will act as operator of the trading platform for such assets. The list of entities authorized to issue and acquire financial digital assets will be determined by the Agency.
— And what about cryptocurrency?
— At present, it is allowed only within the AIFC jurisdiction. There are approved crypto exchanges and brokers whose activities are licensed and regulated exclusively by the independent AIFC regulator. Mining, on the other hand, is governed by Kazakhstan’s general legal framework. The current digital asset law requires miners to sell at least 50% of mined crypto via exchanges operating within the AIFC.
There is now ongoing discussion about liberalizing this approach, potentially expanding miners’ options for issuing unbacked digital assets (cryptocurrencies). In addition, the National Bank is proposing to allow unbacked digital asset transactions on Kazakhstan’s domestic market by legalizing crypto exchanges, with licensing and supervision carried out directly by the National Bank.
These providers would focus exclusively on exchanging fiat currency for crypto for retail customers, without engaging in other types of business. As for crypto exchanges operating in the AIFC, they will likely continue operating. However, a broader conversation is clearly needed to ensure a systematic approach and to avoid regulatory arbitrage.
The opportunity for retail clients to purchase cryptocurrencies comes with risks, and people need to fully understand and accept them. In my view, this will require a rethink of consumer protection policies and a return to responsible behavior — not just from service providers, but from clients as well. Also, cryptocurrency is classified as property, which means there must be effective enforcement tools in place for debt collection that include this type of asset. Likely, this will require amendments to the Civil Code and other relevant laws.
— One MP recently suggested that the National Bank create a reserve fund for seized cryptocurrencies. Does that idea make sense?
— I don’t believe that’s within the National Bank’s mandate at all. It would be much more efficient if seized crypto assets were sold through legal channels and converted into property — ideally cash — which could then be transferred to the state budget or to compensate affected parties.
Another widely used form of property is electronic money. It’s common for court bailiffs to freeze a client’s bank account, but balances in electronic wallets are only reflected within those wallets — the actual account is owned by the payment system operator. This makes it impossible to freeze an individual’s e-wallet directly.
As electronic money issuance increases, we need better mechanisms to disclose wallet balances and prevent individuals from hiding funds to evade debt obligations. Under the current law on payments and payment organizations, only banks and Kazpost are authorized to issue electronic money — in other words, only entities that can open client accounts. Operators of e-money systems are payment organizations. The National Bank’s proposed changes would allow these organizations to issue electronic money and conduct money transfers — but this should not lead to legal gray zones or regulatory arbitrage, especially since banks operate under much stricter oversight.
I believe the feasibility of these proposed changes needs further study before submitting the draft laws to Parliament, in order to ensure a consistent and comprehensive regulatory approach.
— Is the digital tenge the same as electronic money?
— The digital tenge is issued exclusively by the National Bank. It’s money in digital form that can be converted into non-cash or physical cash at any time using the digital infrastructure.
— Will allowing payment organizations to issue electronic money expand the money supply, and possibly affect inflation?
— Let’s clarify: cash, non-cash, and digital tenge are equal in nominal value. But electronic money is different. To put electronic money into your wallet, you must pay for it in tenge — whether by transferring from your account or depositing cash at a terminal. Strictly speaking, you've already paid for it, so it doesn't expand the money supply.
Once issued, electronic money circulates among its holders. You’re essentially joining a club. You need to know where and how you can spend this specific e-money, and under what conditions it can be converted back into fiat currency (i.e., state-backed money). These rules must be clearly outlined in the issuance and usage policies.
— What else should consumers know about electronic money?
— The key point is: you must know that you’re using e-money tied to a specific payment system. As a user, you're responsible for making an informed choice.
