Kazakhstan Plans State Crypto Reserve Funded by Confiscated Assets

Kazakhstan has announced its intention to establish a state crypto reserve, with the National Bank Chairman, Timur Suleimenov, revealing that the primary funding sources will be confiscated criminal assets and state-backed mining operations. This initiative marks the first sovereign digital asset reserve in Central Asia. The reserve will adhere to international best practices for sovereign fund management, emphasizing institutional soundness, transparency in accounting and storage, and sustainability.

The specific mechanisms for building the state crypto reserve will be developed in collaboration with law enforcement and relevant state bodies. Kazakhstan's journey into the crypto mining sector began in 2021 when Chinese mining operations fled regulatory crackdowns, leading the country to control over 27% of global Bitcoin mining. Initially, cheap electricity and minimal regulations attracted miners, but this rapid influx strained the national power grid and exposed critical gaps in legal oversight.

By 2023, new regulations dramatically scaled back mining activities to 4% of the global share. Authorities have since registered 415,000 mining machines, issued 84 licenses with 64 currently active, and accredited five mining pools under the comprehensive licensing system. Law enforcement agencies have demonstrated robust capabilities, shutting down 36 unauthorized platforms worth $118 million in 2024 alone and blocking over 3,500 unlicensed crypto websites.

Advanced mining operations now operate under the innovative “70/30 project,” where foreign investors fund the modernization of thermal power stations, with 70% of the capacity allocated to the national grid. The remaining 30% is reserved for miners, addressing previous grid strain issues while generating state-backed digital assets for the proposed reserve. Notably, legal trading remains concentrated within the Astana International Financial Centre, which operates under its own regulatory framework and has attracted major exchanges.

Kazakhstan’s measured regulatory approach contrasts sharply with that of its neighboring Uzbekistan, which has rapidly adopted cryptocurrencies. This has created distinct competitive dynamics in Central Asia’s emerging digital economy. Uzbekistan currently holds the 54th place in the global crypto adoption index, while Kazakhstan advanced more modestly to the 57th position. Strategically, Kazakhstan prioritizes institutional control and regulatory structure, while Uzbekistan favors broader retail adoption.

Kazakhstan’s digital ambitions extend beyond mining and reserves. The country recently launched the Solana Economic Zone in partnership with the Solana Foundation, creating Central Asia’s first Web3-focused economic zone. President Kassym-Jomart Tokayev also unveiled plans for “CryptoCity,” a pilot zone where cryptocurrencies can be used for everyday payments, signaling the government’s commitment to real-world crypto adoption. The proposed crypto banking system will provide integrated services including digital asset exchange, storage, and transaction processing within regulated parameters.

Prime Minister Bektenov also noted that banks would contribute to anti-money laundering efforts while supporting compliance with terrorism financing regulations. However, despite enforcement efforts, experts estimated that 91.5% of crypto-related activity in 2023 occurred outside regulatory oversight, resulting in a total transaction volume of approximately $4.1 billion. The central bank digital currency development will also continue with the digital tenge launch expected this year.