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HomeLaw & PoliticsKazakhstan wants more regulations for crypto miners with new bill

Kazakhstan wants more regulations for crypto miners with new bill

According to a new measure emerging in Kazakhstan’s Senate, cryptocurrency miners will be compelled to convert up to three quarters of their earnings on locally authorised exchanges. Legislators also want to ensure that cryptocurrency companies pay their taxes and fees.

On first reading, the Mazhilis passed a draft law aimed at creating a legislative framework for the creation and circulation of digital assets in Kazakhstan. On the request of the country’s president, Kassym-Jomart Tokayev, the bill and other supporting documents were written and recently submitted to the lower house of parliament.

Kazakhstan wants more regulations for crypto miners with new bill
Kazakhstan wants more regulations for crypto miners with new bill

One of the primary goals of the Act is to create guidelines for the operation of a new form of financial organisation in Kazakhstan: approved cryptocurrency exchanges. To encourage these trading platforms, the government intends to require crypto miners to exchange up to 75% of their earnings on them beginning in 2024.

Mining pools must also pay taxes on their profits, and exchanges must pay fees. The bill’s authors aim to levy corporation taxes on cryptocurrency enterprises as well. Currently, mining companies are only obligated to pay taxes on the electricity they use to generate digital currency, with rates based on the amount and price of energy consumed.

Kazakhstan lured numerous mining enterprises with its cheap electricity prices after China cracked down on the industry in 2021. However, the rush of miners resulted in a growing power deficit and failures of the country’s old infrastructure, leading to the closure of crypto farms. The Central Asian country was compelled to levy the tax and purchase electricity from Russia.

Another important motivation for the proposed law’s sponsors, according to Ekaterina Smyshlyaeva, member of the Mazhilis Committee for Economic Reform and Regional Development, is the introduction of legal procedures to oversee the usage of electricity in the sector. She also stated that the Ministry of Energy will establish energy quotas for mining in order to keep the country’s energy supply system balanced.

According to the lawmaker, Kazakhstan is being utilised as a “raw-material appendage of the blockchain business,” as reported by the Russian news site RBC Crypto. The existing voluntary registration system for crypto miners will be replaced by a new licensing regime, which will cause a change in the current scenario. Therefore, people who wish to mine would have to create legal corporations and pay taxes.

The bill links the creation and transfer of digital assets within a single ecosystem. Ekaterina Smyshlyaeva went on to say that the Ministry of Digital Development, Innovation, and Aerospace Industry would simultaneously regulate and issue licences for miners’ and mining pools’ operations.

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