Kazakhstan Dives Into Crypto

This move follows years of a complex relationship with digital assets. After China banned crypto mining in 2021, Kazakhstan became a global hub, at one point accounting for 18.1% of the global Bitcoin network hash rate due to its low energy costs. The massive influx of miners strained the country's energy grid, causing power outages and leading to swift regulation. The government officially legalized and licensed mining, implementing a new tax framework and requiring operators to register through the Astana International Financial Centre (AIFC). In parallel, Kazakhstan has been aggressively developing its own central bank digital currency (CBDC), the "digital tenge." The first transaction took place in November 2023, and pilot programs are already using it to track public spending on infrastructure projects and to speed up VAT refunds for exporters. The National Bank of Kazakhstan plans to have the digital tenge fully operational by the end of 2025, aiming to embed the technology into public finance to increase transparency. Total issuance in pilot projects has already surpassed 330 billion tenge (over $685 million). The $350 million allocation will not go directly into buying cryptocurrencies. Instead, Governor Timur Suleimenov stated the focus is on investing in companies and financial instruments related to digital asset infrastructure. This investment represents a fraction of the nation's $69.4 billion in gold and foreign exchange reserves. While countries like El Salvador and Bhutan hold Bitcoin directly in their national treasuries, Kazakhstan's strategy of investing in the underlying infrastructure marks a different approach for a central bank looking to gain exposure to the crypto sector.