In a groundbreaking achievement, the digital tenge, Kazakhstan’s central bank digital currency (CBDC), emerges victorious after a month-long pilot project, paving the way for a multitude of advancements in 2024.
A Pathbreaking Pilot Run
During its trial period, the digital tenge showcased its versatility by providing free lunches to schoolchildren in Almaty. Leveraging the local Onay card, initially designed for transit, the Kazpost postal system facilitated these transactions, marking a significant milestone for the CBDC.
Plastic cards, distributed by four local banks in collaboration with Visa and Mastercard, empowered focus group members. These cards facilitated both in-person and online purchases, along with ATM cash withdrawals. Merchants could opt to accept digital tenge or convert them to “non-cash” tenge, seamlessly integrating into existing point-of-sale and QR systems. This level of interoperability sets a new standard for CBDC functionality, extending beyond Kazakhstan’s borders.
Diverse Experiments Unleashed
The digital tenge’s trial spanned diverse experiments, including cross-border payments via SWIFT and the issuance of CBDC-backed stablecoins on platforms like Binance and KASE. It extended its utility to tokenizing gold, collecting value-added tax through smart contracts, and even testing a move-to-earn app, showcasing the CBDC’s adaptability.
The National Bank of Kazakhstan and the National Payment Corporation of Kazakhstan (NPCK), responsible for administering the CBDC, chart an ambitious course for 2024. Goals include expanding intermediary banks, advancing decentralized finance applications, and enabling offline transactions at scale. This move aims to enhance financial inclusion in regions with limited internet connectivity and boost participation in cross-border payment initiatives like Project mBridge.
Regulatory Vision and Security Assurance
Amid these strides, the NPCK and regulatory bodies aim for synchronized implementation of legislative goals. The focus extends to fortifying digital tenge security and enhancing processing speed. NPCK CEO Binur Zhalenov, in an interview, assured the public that the CBDC would not be exploited for user surveillance.
In summary, Kazakhstan’s digital tenge has not only triumphed in its pilot run but has set the stage for a transformative year ahead. With a focus on inclusivity, innovation, and regulatory compliance, the CBDC’s success heralds a new era in the realm of digital currencies.
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