Kazakhstan Regulator Blocks 3,500 Unlicensed Crypto Exchanges Used By Criminals, Fraudsters

The Agency of the Republic of Kazakhstan for Financial Monitoring (AFM), the nation’s regulator, has blocked the operation of unlicensed crypto exchanges in the region.

The watchdog quoted that several illegal exchanges have recently played a key role in money laundering schemes. They have allowed the conversation of crypto to fiat and vice versa, a translated press release from the agency, read.

“Such structures do not identify their clients and do not detect suspicious transactions,” Kazakhstan regulator emphasized. “That is why their services are often used by criminals, primarily cyber fraudsters and drug traffickers.”

In 2024, the regulator closed down 36 illegal crypto exchangers with a total turnover of 60 billion tenge ($112 million).

The AFM, along with the National Security Committee and the Ministry of Culture and Information, has blocked more than 3,500 illegal online crypto exchanges, the release noted.

“Two financial pyramids that used cryptocurrency to attract investments have been exposed,” said Kazakh authorities. During this time, 545K Tether (USDT) were returned, and 120K USDT were frozen.

Kazakhstan Ousted Coinbase, Kraken and Access to Foreign Brokers

In 2023, Kazakhstan officially blocked Coinbase website, citing violations of the country’s new digital assets law.

While several other crypto exchanges, including Binance, Bybit, and Upbit, have received licenses to operate in Kazakhstan, Coinbase and Kraken have faced restrictions.

Further, the nation has already blocked foreign brokers and crypto exchanges, following reports by the Telegram channel FINANCE.kz. They highlighted that most of these websites were inaccessible in Kazakhstan without using a VPN.

The country has adopted a rigorous approach to cryptos, including mining. Kazakhstan’s financial regulators have frozen $1.2 million in cryptocurrency and shut down 19 illegal over-the-counter platforms.

Additionally, AFM targeted illegal crypto-mining operations, dismantling nine mining sites and seizing around 4,000 mining rigs.

However, per a recent report by RISE Research and Freedom Horizons, Kazakhstan’s population owning cryptocurrencies has doubled in two years.

There has been a notable increase in tax revenues from the country’s burgeoning digital asset sector in 2024, it noted. Licensed crypto providers contributed $367,000 in taxes from January to August 2024, compared to $275,000 overall in 2023.