Kazakhstan Investigates Coinbase for Money Laundering Amid Crypto Industry Crackdown

Coinbase is under investigation in Kazakhstan for alleged money laundering as the nation intensifies its crackdown on the cryptocurrency industry. The United States’ largest cryptocurrency exchange, Coinbase, has been targeted for a money laundering investigation in Kazakhstan, as reported by the local news outlet Kursiv.

Kazakhstan’s Ministry of Culture and Information has confirmed the blocking of Coinbase within the country for violating local digital asset regulations. At the same time, the government has discreetly lifted the ban on Interactive Brokers and the New York Mercantile Exchange (NYMEX), which were previously blocked earlier this year.

The Ministry of Information states that Coinbase’s access was restricted following a request from the Ministry of Digital Development, due to the exchange’s cryptocurrency trading activities. This is in breach of Kazakhstan’s Law on Digital Assets, specifically Clause 5, Article 11, which outlaws the issuance, circulation of uninsured digital assets, and the functioning of exchanges that trade such assets.

Several platforms like Binance and Upbit have been authorized to run crypto exchanges in Kazakhstan, but only within the Astana International Financial Centre (AIFC) special economic zone. Coinbase, a major global crypto trading platform, was blocked under the Communications Act for not having the necessary authorization to operate in Kazakhstan outside the AIFC jurisdiction.

Previously, Interactive Brokers and the commodities exchange NYMEX also faced access issues. The Financial Monitoring Agency had accused Interactive Brokers of fraudulent activities and included it in the state censorship database, while NYMEX was charged with unauthorized trading of Bitcoin (BTC) and Ethereum (ETH) futures by the AIFC.

However, the Information Ministry has since reinstated access to Interactive Brokers at the behest of the Financial Monitoring Agency. The reasons for unblocking NYMEX, which continues to trade crypto futures outside of AIFC regulations, remain undisclosed.

The blockage of major foreign trading platforms like Coinbase has been criticized by experts, including economist Rasul Rysmambetov, who labeled it as a grave error. He suggests that there might have been a lack of proper site analysis by technology specialists before making such decisions.

Under AIFC regulations, foreign companies can apply for licenses to offer financial and technology services in the special economic zone, subject to approval by the AFSA regulatory committee. Companies not immediately meeting all requirements can still gain entry by joining a “FinTech Lab” regulatory sandbox.

Therefore, while Coinbase is still blocked in Kazakhstan due to cryptocurrency violations, the unexplained reactivation of Interactive Brokers and NYMEX has left experts bewildered. The government maintains stringent standards for foreign trading platforms, closely monitoring any activities that might contravene local regulations.

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