Amid a rise of stablecoins and unbacked cryptocurrencies, the effectiveness of central bank monetary policies has started to wane. A lack of clear legal and regulatory framework surrounding the use of cryptocurrencies has also invited risks of money laundering—and fueled a boom in illicit crypto activity.
For these reasons, more than 150 countries are exploring a central bank digital currency of their own, with emerging Asian markets rushing to launch concept notes and pilots. Now, Kazakhstan has reportedly joined the fray. The National Bank of Kazakhstan (NBK) has set up a regulatory agency to oversee the development and implementation of the country’s CBDC, the digital tenge.
On September 15, Kazakhstan’s central bank announced it has tasked the National Payment Corporation (NPC) with handling the national payment system—including interbank clearing services, money transfers and digital identification. Other responsibilities of the new body include the development of “digital infrastructure” and implementation of the digital tenge.
The NBK had rolled out the pilot of the country’s CBDC in February this year, with an official launch scheduled in 2025. At the time, NBK governor Berik Sholpankupov highlighted the bank’s vision of a “collaboration between traditional finance and DeFi”, emphasizing that it could lead to financial inclusion and lift international trade.
According to media reports, Kazakhstan is currently running its pilot project focused on digital tenge under a controlled environment, with select consumers and merchants. A key partner in the initiative, crypto trading platform Binance provides technical solutions via BNB Chain.
Binance, the world’s largest crypto trading platform, had in October 2022 received a permanent license from Kazakhstan’s Astana Financial Services Authority (AFSA to manage a digital asset platform and offer custody services. The same month, the NBK unveiled plans to incorporate its CBDC into the Binance BNB chain.
Notably, Kazakhstan introduced an anti-money laundering legislation back in 2021, with an aim to bring crypto businesses and service providers under the purview of the country’s financial surveillance system. Last month, the NBK presented a detailed proposal for their CBDC, the digital tenge, to the country’s Supreme Audit Chamber. The development came on the heels of Russia’s pilot of the digital ruble and Belarus’s plan for a digital fiat. Meanwhile, lawmakers in the US are planning to introduce a comprehensive legislation to oversee the crypto sector, ahead of the 2024 elections.