Kazakhstan bans Coinbase amid crackdown on unregulated crypto activity

The Ministry of Culture and Information in Kazakhstan recently blocked access to prominent crypto exchange Coinbase and select online brokerage websites, including the New York Mercantile Exchange (NYMEX), local media reported on Nov. 7.

The actions are grounded in Kazakhstan’s stringent “Digital Assets Law,” a comprehensive piece of legislation that governs the issuance and circulation of digital assets within the nation.

The Digital Assets Law was introduced to create a structured regulatory environment for the cryptocurrency sector and to provide specific guidelines for the activities of online brokers.

Its main objective is to ensure that cryptocurrency trading activities align with established regulatory parameters to promote a secure and controlled environment for digital asset transactions.

Coinbase does not have a license

Under the new rules, the issuance and circulation of unbacked digital assets are prohibited in the country unless conducted within the Astana International Financial Center (AIFC).

Any company that wants to offer services related to digital assets must secure a license from the Astana financial watchdog. Binance and Bybit are two crypto exchanges that have secured licenses to operate in the country in recent months.

According to the report, the government believes that Coinbase is in direct violation of regulations as it does not hold a license to operate in the AIFC. The exchange’s website was subsequently blocked in accordance with the provisions of the communication law, which mandates that service providers restrict access to websites with prohibited content.

Coinbase’s case represents a significant development within the cryptocurrency industry, emphasizing the importance of adhering to local financial regulations.

As a major international cryptocurrency exchange, its restriction reflects Kazakhstan’s commitment to enforcing its laws and regulations in this rapidly evolving sector.

NYMEX unblocked after suspension

In addition to Coinbase, the government also blocked websites affiliated with Interactive Brokers and NYMEX. Interactive Brokers’ scrutiny stemmed from concerns regarding potentially fraudulent activities and financial pyramid schemes.

Meanwhile, NYMEX faced restrictions due to its offering of futures trading in Bitcoin and Ethereum, activities that fell outside the jurisdiction of the International Financial Center. However, both companies’ websites were unblocked after the Financial Monitoring Agency submitted requests to restore them.

The recent regulatory actions within the country have prompted discussions and concerns among the financial community. Some experts have voiced criticism of the measures, suggesting that they may be overly broad or potentially erroneous.

While Kazakhstan continues to navigate its cryptocurrency and financial regulatory landscape, the impact of these measures on digital asset exchanges and brokers operating within the country remains a subject of ongoing interest and discussion.