Kazakhstan is set to establish a national cryptocurrency reserve fund valued between $500 million and $1 billion, primarily utilizing assets that have been seized and repatriated from abroad. 

Central Bank Governor Timur Suleimenov announced the initiative during an interview with Bloomberg in London, stating that the fund would focus on investments in exchange-traded funds (ETFs) and shares of companies involved in the sector, rather than holding digital assets directly.

During the interview, Suleimenov expressed confidence that the fund would be operational by the end of the year or early January. He emphasized that the investment strategy would be cautious, steering clear of direct crypto exposure. 

Kazakhstan’s Deputy Chairman of the National Bank, Berik Sholpankulov, further clarified the government’s strategy, revealing that they are considering using some of the National Fund’s assets, as well as gold and foreign exchange reserves, for investments linked to crypto assets. 

Sholpankulov noted that any such investment activities would be managed exclusively through a state-run digital asset fund, which is currently under discussion.

The National Bank’s Deputy Chairman detailed that confiscated cryptocurrency assets would be allocated to this state digital asset fund, where they will serve as a strategic reserve for the government. 

Additionally, he mentioned a proposal from the Ministry of Digital Development to allow state-owned mining companies to provide energy to private mining operations in exchange for payment in virtual currencies.

According to the National Bank, the assets of the National Fund increased by $990 million in September compared to August, reaching a total of $62.7 billion. Concurrently, gold and foreign exchange reserves also saw a rise, with gold reserves growing to $39.7 billion, despite a decline in foreign exchange assets.

This initiative comes on the heels of the National Bank’s approval of a concept to create a national reserve of crypto assets, which will be managed through a new subsidiary focused on alternative investments. 

The government is also exploring the establishment of licensed crypto banks and a national cryptocurrency exchange to foster a regulated environment for digital asset trading in Kazakhstan.

Over the past few months, authorities have cracked down on illicit cryptocurrency exchanges, shutting down 130 operations suspected of laundering criminal proceeds. This crackdown has led to the seizure of crypto assets worth approximately $16.7 million. 

However, Sholpankulov noted that around $15 billion in cryptocurrency has reportedly exited the country due to regulatory gaps surrounding digital assets.

At the time of writing, Bitcoin (BTC) was trading at $100,820, marking a notable 9% decline over the past week. This puts the leading cryptocurrency 20% below its all-time high of $126,000, which was reached in early October of this year. 

Featured image from DALL-E, chart from TradingView.com 

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