Kazakhstan Wipes Out Illicit Crypto Exchanges in 96% Drop from 2023
Kazakhstan Cracks Down on Illicit Crypto Exchanges, Shuts Down 36 Operations Amid Ongoing Efforts to Combat Money Laundering
Kazakhstan has made significant strides in combating money laundering in the region by taking down 36 illicit cryptocurrency exchanges in 2024, marking a notable decline of 96% from the total number of unlicensed crypto exchanges shut down in 2023. This development is part of ongoing efforts to regulate and monitor the financial sector’s involvement with cryptocurrencies in Kazakhstan.
The shutdown of these illicit operations comes as the Financial Monitoring Agency of the Republic of Kazakhstan announced on January 6, 2024, that it had successfully dismantled a total of 36 unlicensed crypto exchanges operating without proper authorization. It is worth noting that despite this significant reduction, global cryptocurrency exchanges with operational licenses continue to operate legally in Kazakhstan.
A key concern for authorities has been the facilitation of money laundering through these illicit operations. The Financial Monitoring Agency pointed out in its notice that illegal crypto exchanges often fail to scrutinize client identities and engage in suspicious transactions, thereby enabling rogue entities like cybercriminals and drug traffickers to exploit their services for malicious intentions.
Details of the Illegal Crypto Exchanges Dismantled
The 36 crypto exchanges shut down had a total turnover of approximately 60 billion Kazakhstani tenge (approximately $112.8 million), according to reports from the Financial Monitoring Agency. Furthermore, authorities confiscated assets worth around 2.5 billion tenge ($4.8 million) in connection with these operations.
This crackdown on illicit crypto services stems from a broader effort by Kazakhstan’s authorities to maintain oversight and control over the cryptocurrency sector. The move aligns with global standards aimed at curbing money laundering and ensuring transparency in financial transactions.
Historical Context: Ongoing Crusade Against Illicit Crypto Services
Kazakhstan has made significant strides in regulating and monitoring financial activities involving cryptocurrencies. In 2023, the agency reported blocking a total of 980 unlicensed crypto exchanges. This move was part of an ongoing campaign to eliminate unauthorized services that potentially facilitate money laundering.
Furthermore, nine investigations were launched simultaneously into "illegal exchange operations" and money laundering. Despite these strict regulations aimed at curbing illicit financial activities, licensed international exchanges continue to operate legally within Kazakhstan’s borders. These include entities such as Binance, Bybit, CaspianEx, Biteeu, ATAIX, Upbit, and Xignal&MT.
Partnership with International Organizations and Development of a CBDC
Authorities in Kazakhstan are not alone in their efforts to counter the ill-effects of cryptocurrencies. They plan to continue collaborating with international organizations to combat the misuse of digital currencies, enhance transaction monitoring tools, and enforce legislation that penalizes money laundering activities.
In addition to implementing regulatory measures, Kazakhstan is also developing its own central bank digital currency (CBDC), known as the digital tenge. The project began in February 2023, but it has faced challenges in meeting an initial target launch date set for next year.
Kazakhstan’s efforts are part of a larger push towards innovation and financial integration within the region while maintaining strict standards to combat criminal misuse of digital assets.
