Kazakhstan Cracks Down on Crypto Shadows to Fuel Blockchain Ambitions

Kazakhstan has intensified its regulatory crackdown on unlicensed cryptocurrency platforms, shutting down 130 illegal exchanges and seizing $16.7 million in digital assets as part of a broader effort to combat money laundering and illicit financial activity. The Financial Monitoring Agency (AFM) reported that these platforms operated outside the licensing framework enforced by the Astana Financial Services Authority (AFSA), which requires crypto exchanges to integrate with local banks and comply with anti-money laundering (AML) regulations. The enforcement action, announced in October 2025, follows a 2024 campaign that saw 36 unlicensed exchanges closed, with $4.8 million in assets frozen.

The crackdown extends beyond exchanges, with authorities uncovering 81 clandestine cash-out networks involved in converting cryptocurrency to fiat currency. These networks, which operated through shell companies and anonymous transactions, generated $43 million in turnover in 2024. Deputy Chairman of the AFM, Kairat Bizhanov, highlighted that ATMs remain a critical vulnerability, with $24.1 billion in cash withdrawals recorded in 2024-$1 billion more than the previous year. To address this, regulators have expanded biometric authentication requirements for high-value card transactions and mandated the retention of ATM surveillance footage for 180 days.

The AFM and National Bank of Kazakhstan have introduced stricter measures to curb anonymous transactions. Card top-ups exceeding 500,000 tenge ($913) now require users to input identification numbers and confirm via mobile apps. Plans are underway to implement facial recognition and fingerprint verification for all cash transactions, aiming to prevent impersonation and enhance traceability. These steps align with broader regulatory amendments to business registration protocols, which now mandate enhanced due diligence for company founders and executives to combat shell company fraud.

Kazakhstan's enforcement efforts reflect its dual ambition to position itself as a blockchain hub while maintaining financial oversight. The country launched the Alem Crypto Fund in September 2025, its first national crypto reserve, selecting BNB as the initial asset through a partnership with Binance Kazakhstan. Concurrently, the government has rolled out initiatives such as the Solana Economic Zone and a pilot crypto city in Alatau, aiming to attract Web3 projects and institutional investors. However, these ambitions clash with an ongoing energy crisis, where cryptocurrency mining consumes 901 million kWh annually, straining an aging grid and prompting warnings from the Supreme Audit Chamber about uncontrolled energy use.

The regulatory push has drawn scrutiny over privacy concerns. Cybercrime consultant David Sehyeon Baek noted that while biometric measures could deter illicit activity, they risk becoming tools for pervasive surveillance without robust safeguards. The AFM's enforcement actions have also targeted illegal platforms operating in a "gray zone," where 91.5% of digital asset transactions occurred outside state oversight in 2023. Despite these challenges, authorities argue that legalizing and regulating crypto operations could generate $190 billion annually, funding public infrastructure projects.

Kazakhstan's approach balances innovation with compliance, as seen in its approval of stablecoin payments for regulatory fees and the launch of Central Asia's first Bitcoin ETF in August 2025. The country's digital tenge project, a central bank digital currency (CBDC), is slated for a 2025 rollout, further cementing its role in the region's evolving crypto landscape.