Crypto licensing in Kazakhstan

Why Kazakhstan should be considered for crypto business development?

There are several key factors in Kazakhstan that make the country attractive for crypto business:

• Stability: The country is known for its stable political and economic environment, which guarantees a safe environment for long-term projects and businesses.
• Favorable tax policy: Relatively low tax tariffs make Kazakhstan attractive for crypto businesses. Special tax incentives for companies working with cryptocurrencies stimulate the influx of investment.
• Growing Market: With growing interest in cryptocurrencies and the development of related infrastructure, Kazakhstan represents a market with great prospects for entrepreneurs and investors.
• Government support: The Kazakh government actively supports and promotes the development of crypto business in the country. This includes the creation of an enabling legal environment and regulation in this area.
• Geographical Location: Kazakhstan is strategically located between Europe and Asia, which can provide companies with access to a variety of markets.
• Developing technological infrastructure: the jurisdiction is actively investing in the development of technological infrastructure, including high-speed Internet and digital services, which is quite attractive for those wishing to register a crypto exchange in Kazakhstan.
• Potential for Innovation: Kazakhstan aims to become an innovation hub in the region, and crypto businesses can play an important role in this process.
• Local expertise: Kazakhstan has qualified specialists and experts in the field of blockchain technologies and cryptocurrencies, which can be a valuable resource for companies.
• Cooperation with international organizations: Kazakhstan actively cooperates with international organizations and regulators, which helps to establish trust and transparency in the crypto business.

Development of the cryptocurrency market in Kazakhstan

The history of the development of the cryptocurrency market in Kazakhstan is a fascinating journey through several key stages:

These stages emphasize the gradual strengthening of Kazakhstan’s position on the global map of cryptocurrencies and blockchain technologies, as well as the desire to create a modern and competitive crypto industry in the country.

Pros and cons of crypto licensing in Kazakhstan

When considering crypto licensing in Kazakhstan, it's important to weigh the pros and cons. Here's a brief overview:

Pros:

1. Stability: Kazakhstan is known for its stable political and economic environment, providing a secure setting for long-term crypto projects and businesses.
2. Favorable Tax Policy: Relatively low tax rates make Kazakhstan attractive for crypto businesses. Special tax incentives for crypto-related companies encourage investment.
3. Growing Market: The increasing interest in cryptocurrencies and the development of related infrastructure offer promising prospects for entrepreneurs and investors in Kazakhstan.
4. Government Support: The Kazakh government actively supports and promotes crypto business development, creating a conducive legal environment and regulation.
5. Geographical Location: Situated between Europe and Asia, Kazakhstan offers access to diverse markets, making it strategically advantageous.
6. Technological Infrastructure: Kazakhstan is investing in technological infrastructure, including high-speed internet and digital services, which benefits crypto exchanges.
7. Potential for Innovation: Kazakhstan aspires to become an innovation hub, with crypto businesses playing a crucial role in this endeavor.
8. Local Expertise: The country boasts qualified specialists and experts in blockchain and cryptocurrencies, a valuable resource for companies.
9. Cooperation with International Organizations: Kazakhstan actively collaborates with international organizations and regulators, fostering trust and transparency in the crypto business.

Cons:

1. High Financial Requirements: Regulators may impose substantial minimum capitalization requirements, challenging startups and smaller companies.
2. Safety and Technical Standards: Compliance with stringent security and technical standards necessitates additional investments in technical infrastructure.
3. Legislative Changes: Cryptocurrency legislation can change, creating uncertainty and requiring ongoing monitoring and adaptation.
4. Tax Obligations and Reporting: Companies must fulfill tax obligations and reporting requirements, demanding additional resources and effort.
5. Reputation Risk: Negative public opinion or scandals in the crypto space can impact a company's reputation and customer base.
6. Market Competition: The crypto business in Kazakhstan is becoming more competitive, with companies facing strong rivalry in the market.
7. International Compliance: Meeting international standards and requirements may entail extra effort and cooperation with international regulators and organizations.

The need for crypto licensing

 Why do you require a license to operate with cryptocurrencies?

Obtaining a crypto license in Kazakhstan is an important step for companies working with cryptocurrencies and crypto-assets. Here are some of the main reasons why a license is necessary:

1. Legality and Compliance: A crypto license ensures that your company operates within Kazakhstan's legal framework, preventing legal problems and fines.
2. Trust of Clients and Investors: It builds trust with clients and investors, showing your commitment to compliance.
3. Conducting Crypto Transactions: The license grants permission to conduct crypto-related activities like exchange, sale, and storage in Kazakhstan.
4. Participation in Regulated Markets: Some platforms require a license, expanding your market access.
5. Increased Competitiveness: It sets your company apart from unregulated competitors, attracting customers and investors.
6. Risk Protection: Compliance standards reduce risks related to security and anti-money laundering.

Possible dangers for companies without a crypto license

Companies operating in the cryptocurrency space without an appropriate license in Kazakhstan face a number of legal and economic threats. Here are the main risks for such companies:

Economic prerequisites and capitalization requirements for creating a cryptocurrency company in Kazakhstan

The financial requirements and degree of capitalization for establishing a cryptocurrency organization in Kazakhstan may vary based on specifications set by regulatory authorities. Typically, these requirements include:

• Initial capital: depending on the nature of the cryptocurrency company’s activities, regulators determine the minimum amount of authorized capital that must be provided upon its registration.
• Financial support: the organization is obliged to confirm the availability of sufficient financial resources for reliable operation and fulfillment of its obligations to users.
• Compliance with Capital Requirements: Certain capital requirements may be set by regulatory authorities, which the company must strictly adhere to throughout its existence. This may apply to both the minimum capital amount and investments in certain types of assets.
• Filing financial statements: An organization is required to file financial statements regularly while following accounting standards and rules set by regulators.
• Insurance and Warranties: In some circumstances, insurance policies or guarantees may be necessary to protect the interests of users.

Technological and safety standards for corporations

For companies engaged in cryptocurrency activities in Kazakhstan, technological and security criteria are of paramount importance to ensure user protection and stability of operations. Key elements of these standards may include:

• User privacy: Organizations must ensure that customers' personal and financial information remains as secure as possible through the use of encryption technologies, authentication tools, and other security tools.
• Countering Cyber Threats: Cryptocurrency companies must have best practices in place to protect against cybercrime and fraud, including monitoring network activity, breach detection tools, and antivirus programs.
• Compliance with regulatory standards: Cryptocurrency organizations in Kazakhstan must strictly follow rules and standards in the field of technical and information security. This also involves compliance with KYC and AML principles to correctly identify clients and prevent illegal actions.
• Backup and recovery: It is necessary to have clearly defined procedures for backup and recovery of information to ensure the safety of data and its rapid recovery after technical failures or emergency circumstances.
• Staff training: Training employees on safety and technical regulations is key. Workers must be aware of potential risks and know how to counter them.
• Analysis and Monitoring: Continuous monitoring and assessment of your security posture will help identify and address vulnerabilities and ensure compliance with applicable standards.

Sequence of actions for applying for a cryptocurrency license in Kazakhstan:

Obtaining a cryptocurrency license in Kazakhstan involves a specific sequence of actions. Here's an overview of the steps to apply for a crypto license in Kazakhstan:

1. Preparation of Documents:
   1. Gather all necessary company incorporation and registration documents.
   2. Prepare your business plan, internal controls, financial statements, and any other required materials.
2. Application Form:
   1. Fill out the official crypto license application form, providing comprehensive information about your company, its structure, and beneficiaries.
3. Documentation Application:
   1. Attach all prepared documents to your application.
   2. Ensure that the documents comply with the regulator's requirements and are presented in the required format (either electronic or paper).
4. Payment of State Duty:
   1. Pay the state fee required for the consideration of the application and subsequent issuance of the license.
   2. The amount and payment methods may vary depending on the regulatory authority and the type of license.
5. Technical Training:
   1. Ensure that the necessary technical infrastructure is in place and operational to facilitate secure interactions with cryptocurrencies.
6. Submitting an Application:
   1. Submit the completed application along with the supporting documents to the relevant regulatory authority responsible for issuing crypto licenses.
   2. Ensure that you address the application correctly and choose a secure method for submission.
7. Wait for the Answer:
   1. Allow the regulator sufficient time to review the information provided in your application.
   2. During this period, the regulator may request additional materials or seek clarifications regarding your application.
8. Obtaining a License:
   1. If your application meets all requirements and is approved, you will be granted a cryptocurrency license.
   2. Upon receiving the license, ensure strict compliance with all applicable conditions and laws.

 Documentary Basis of the Licensing Process:

1. Constituent Materials: Include originals and copies of documents like Articles of Association, Memorandum of Association, and related documents that establish the legal basis of the company.
2. Strategic Business Plan: Provide a detailed plan outlining the organization's core business strategy, mission, vision, goals, and tactical plans for the immediate future.
3. Internal Control Regulations: Cover all key principles, techniques, and mechanisms used to monitor and control the company's internal operations, with a focus on risk management.
4. Financial Statements: Submit current financial documents such as the balance sheet, income statement, and related materials that reflect the financial condition of the company.
5. Information about Final Beneficiaries: Include information about the actual owner(s) of the company, which may encompass details about individuals and legal entities.
6. Confirmation of Qualifications: Include documents like certificates, diplomas, and letters of recommendation that validate professional training and experience in the field of cryptocurrencies and blockchain.
7. Personal Information of Management and Founders: Provide full copies of passports and other important documents containing information about key figures within the company.
8. Additional Materials: Be prepared to submit any other documents or information that regulators may require, depending on the specific nature of the business or regulatory considerations.

Frequent errors and problems when submitting documents for a crypto license in Kazakhstan:

1. Incomplete Set of Documents: Ensure all required documents, including articles of incorporation and financial statements, are provided.
2. Incorrectly Drawn-Up Business Plan: Develop a detailed and accurate business plan to avoid application issues.
3. Non-Compliance with Technical Standards: Conduct a security and technical audit to meet required standards.
4. Incorrect Assessment of Financial Condition: Provide accurate financial information and necessary documents.
5. Inattention to Deadlines: Be vigilant about submission deadlines to prevent delays in the licensing process.

Conclusion

The registration of foreign crypto companies in Kazakhstan offers promising opportunities in a stable and supportive environment. By adhering to international standards, addressing common application errors, and meeting regulatory requirements, foreign companies can navigate the process successfully. Kazakhstan's growing cryptocurrency market, government support, and strategic location make it an attractive destination for crypto business development, while compliance with licensing ensures legal operation and trust among clients and investors.