In a surprising move, the Kazakh government has blocked access to Coinbase, one of the world’s leading cryptocurrency exchanges, citing violations of a new digital assets law. According to reports by local media, this decision comes in response to cryptocurrency trading on the platform, which is said to directly conflict with the country’s recently enacted legislation.
Kursiv News, a local media outlet, reported that Kazakhstan’s Ministry of Culture and Information clarified that the move to block Coinbase is related to cryptocurrency trading on the exchange that contradicts paragraph 5 of Article 11 of Kazakhstan’s Law on Digital Assets. According to the ministry, this action was taken to bring Coinbase in line with the country’s cryptocurrency regulations.
Article 11, Clause 5 of the Law on Digital Assets in Kazakhstan explicitly prohibits the issue and circulation of unsecured digital assets, as well as the activities of crypto exchanges dealing in such assets, with the exception of the territory of the Astana International Financial Center (AIFC). Several other cryptocurrency exchanges, including Binance, CaspianEx, Biteeu, ATAIX, Upbit, Xignal&MT, and Bybit, have received licenses to operate within the country, and a work permit in the AIFC is issued by the Astana Financial Services Regulatory Committee (AFSA).
The Ministry of Digital Development submitted a request to the Ministry of Information, urging them to limit access to Coinbase, as it was in violation of the law. Consequently, Coinbase was blocked in Kazakhstan under the provisions of the Communications Act, which requires internet service providers to restrict access to websites hosting prohibited content.
In addition to Coinbase, the websites of Interactive Brokers and the New York Mercantile Exchange (NYMEX) were also initially blocked in Kazakhstan. The Ministry of Information attributed the blocking of these platforms to identified violations in their activities, which led to the restrictions based on the provisions of the communications law.
Regarding Interactive Brokers, it was revealed that in November of the previous year, the Agency for Regulation and Development of the Financial Market (ARFRDF) included the brokerage’s website in the Cybernadzor system database due to the identification of signs of a “financial pyramid and other fraudulent transactions” in the company’s operations. On the other hand, NYMEX’s website was blocked because the exchange was facilitating the trading of futures on cryptocurrencies Bitcoin and Ethereum outside the jurisdiction of the AIFC. However, after some time and resonance among financial experts, the sites were reinstated and made available in full.
The Ministry of Information disclosed that it had received a request from the Financial Monitoring Agency to restore access to the Interactive Brokers website, based on which they issued an order to unblock it. However, the reasons for restoring access to NYMEX were not explained, as the exchange continued to offer futures trading on Bitcoin and Ethereum outside the AIFC’s jurisdiction without a work permit from the AFSA.
In Kazakhstan, both local and foreign companies with minimal resources have the opportunity to obtain a license to operate in the AIFC. These firms are allowed to offer FinTech and RegTech services without having to immediately comply with all regulatory requirements. To register a company in the AIFC, an initial application must be submitted, outlining the concept of the project’s development. If approved, a complete application must be submitted within two months for further review by the AFSA, and authorization on the FinTech Lab site is granted once all prerequisites are met.
This move to block foreign brokers and crypto exchanges in Kazakhstan initially gained attention when the Telegram channel FINANCE.kz, now The Tenge website, reported the issue. The publication noted that most websites of foreign brokers and crypto exchanges were inaccessible in Kazakhstan without using a VPN. Interactive Brokers, in particular, was still opening accounts for Kazakh users.
Financial analyst Andrey Chebotarev, who owns The Tenge, called the blocking of NYMEX and Interactive Brokers an “absolute mistake.” He suggested that technical specialists may have inadvertently blocked these sites as part of a broader blocking initiative.
Interactive Brokers, an American brokerage firm, operates one of the largest electronic trading platforms in the United States, serving nearly 2 million institutional and individual brokerage clients. The company began offering cryptocurrency trading to its clients in September 2021. NYMEX, on the other hand, is an American commodity futures exchange and is a major player in the oil futures trading industry.
The blocking of these cryptocurrency platforms and financial services in Kazakhstan highlights the evolving regulatory landscape for digital assets and cryptocurrency exchanges worldwide, as governments grapple with how to address the growing influence of these new financial technologies. It also underscores the potential impact of such decisions on both domestic and international investors and the cryptocurrency industry as a whole. The situation is likely to be closely monitored by the global cryptocurrency community and financial experts as it continues to develop.
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