Kazakhstan Combats Crypto Crime with Biometric Checks, Backs Blockchain Innovation

Kazakhstan has intensified its crackdown on unlicensed cryptocurrency platforms, shutting down 130 illegal exchanges and seizing $16.7 million in digital assets during a nationwide enforcement campaigntitle1^[1]. The Financial Monitoring Agency (AFM) confirmed that the operations targeted platforms suspected of laundering criminal proceeds, with authorities also uncovering 81 underground cash-out networks that processed over $43 million in 2024title2^[2]. The crackdown aligns with a broader regulatory strategy to curb illicit financial activity, including stricter oversight of ATM withdrawals and the introduction of biometric authentication for cash transactionstitle3^[3].

The enforcement actions reflect Kazakhstan's dual approach to crypto governance: dismantling unregulated activity while fostering innovation through state-backed initiatives. The country launched the Alem Crypto Fund in September 2025 as its first national crypto reserve, selecting BNB as the initial asset through a partnership with Binance Kazakhstantitle1^[1]. Managed by the Ministry of Artificial Intelligence and Digital Development, the fund aims to serve as a "reliable instrument for major investors" and a foundation for digital state reservestitle1^[1]. Concurrently, the government announced the Solana Economic Zone, a blockchain-focused pilot project in Alatau designed to support Web3 innovation and institutional adoptiontitle3^[3].

Regulatory measures have also targeted anonymous transactions and shell companies. New rules require identity verification for card top-ups exceeding $913 and mandate biometric checks, including facial and fingerprint recognition, for cash withdrawalstitle2^[2]. Since 2022, authorities have canceled the registration of 3,600 shell companies linked to $511 million in fraudulent transactionstitle1^[1]. The National Bank of Kazakhstan is further advancing the digital tenge, a central bank digital currency (CBDC), with a full rollout expected by year-end 2025title3^[3].

The enforcement campaign follows earlier actions in 2024, when regulators shut down 36 illegal exchanges with a combined turnover of $112 million and blocked over 3,500 unlicensed platformstitle1^[1]. These efforts are part of a broader push to position Kazakhstan as Central Asia's blockchain hub. The country has already introduced stablecoin payments for regulatory fees, with Bybit becoming the first exchange to sign a multilateral agreement with the Astana Financial Services Authority (AFSA)title1^[1]. Additionally, Kazakhstan launched Central Asia's first spot Bitcoin ETF in August 2025, managed by Fonte Capitaltitle3^[3].

Analysts highlight the tension between innovation and oversight in Kazakhstan's strategy. While the government emphasizes transparency and anti-money laundering (AML) compliance, critics caution that biometric authentication systems could evolve into surveillance tools without robust data-protection lawstitle3^[3]. National Bank Chairman Timur Suleimenov has outlined plans to channel portions of the country's gold and foreign exchange reserves into crypto-linked investments, mirroring strategies used by sovereign wealth funds in Norway and the U.S.title3^[3]. The balance between fostering crypto adoption and mitigating risks remains central to Kazakhstan's digital transformation.