The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan has presented draft legislation to Parliament’s Mazhilis to update the banks framework, with a focus on enabling further fintech development and creating a regulatory regime for digital financial assets. The package would expand banks’ ability to invest in the capital of financial-technology companies operating in areas such as digital technologies, e-commerce, cybersecurity, biometrics, artificial intelligence and telecommunications, while introducing limits on the size and share of such participations. It would also make banks personally responsible to clients where banking services are delivered via transferring the bank’s technology infrastructure to another organisation. A core change is the introduction of regulation for “digital financial assets” as a new asset class, split into three types: stablecoins (digital assets evidencing a right to claim money), asset-backed digital financial assets and financial instruments issued in digital form. The National Bank of Kazakhstan would regulate stablecoin issuance and circulation and license “digital platform operators” as a new category of market participant that would issue digital financial assets, while the Agency would set issuance and circulation requirements for the other two digital financial asset types. The draft also legislates the digital tenge as a new form of national currency, with the National Bank defining its circulation and use, and proposes tighter regulation of payment organisations through additional capital and risk management requirements.

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