Kazakhstan, aiming to advance trials of its digital Tenge CBDC this year, has sought the UAE’s expertise to explore the Web3 sector. In a recent development, the National Bank of Kazakhstan signed an MoU with the Central Bank of the UAE (CBUAE) to collaborate on fintech, cybersecurity, and CBDCs. Kazakhstan also intends to leverage the UAE’s experience in regulating virtual digital assets (VDAs) to shape its own regulatory framework.
A delegation from Kazakstan’s National Bank visited the UAE last week to meet with officials from the CBUAE. During the meeting, officials from both agencies discussed topics like digital assets regulation and CBDC uses, the National Bank said in a statement.
Key Details About the Meetings
During their UAE visit, officials from the National Bank of Kazakhstan met with leaders from the Abu Dhabi Global Market (ADGM) and the Dubai Financial Centre Authority (DFSA). Their focus was to learn how UAE’s financial hubs leverage advanced technologies for payments and transactions. Kazakhstan is evaluating whether similar strategies can be implemented within its crypto-friendly Astana International Financial Centre (AIFC).
These financial centres of Dubai and Abu Dhabi have made strides in exploring VDA use cases in recent years. Last month, the DFSA authorised Ripple to offer crypto-based payment services to companies operating from the Dubai International Financial Centre (DIFC).
The Abu Dhabi Global Market (ADGM), meanwhile, has also been working with Binance to offer crypto custody and other related services in the financial centre that houses over 2,000 global companies.
Kazakhstan authorities could reportedly use details from UAE’s case studies to improve its financial market infrastructure and experiment in blockchain-based cross-border trading.
Elaborating further, the National Bank of Kazakhstan said, “an exchange of experiences on digital financial assets regulation and the development of blockchain technologies took place with the management of the Virtual Assets Regulatory Authority (VARA).”
While most countries like India and the US among others are still working to regulate their Web3 sectors — the UAE has already established itself as a Web3 hub in recent years. Not only Kazakhstan, but other nations like Malaysia and the US are also turning to the UAE for guidance on VDA regulations.
Kazakstan’s History with Web3
In 2022, Bitcoin mining had become a popular business activity in Kazakhstan. However, owing to power outages and excessive electricity consumption by crypto miners, the government cracked down on illegal mining operations. To curb such activities, the government also levied a tax hike on electricity prices.
In the same year, Binance also established an office in Kazakhstan’s own financial centre, the AIFC. At the time, Binance said it would help the country develop Web3 regulations.
In 2023, Kazakhstan formalised certain rules to govern the digital assets space. These included a licencing requirement for crypto businesses as well as compliance mandate on anti-money laundering and counter-terror financial measures.
Authorities in Kazakhstan reportedly launched the digital Tenge CBDC for public trials last year. As per its plans, the CBDC is expected to see a wider rollout by the end of this year.
