Article: Felix, PANews
Timur Suleimanov, the governor of the Central Bank of Kazakhstan, stated on March 6 that the central bank plans to use part of its gold and foreign exchange reserves to invest in the cryptocurrency sector, with an amount of up to $350 million.
Although specific investment asset categories and timelines have not been disclosed, according to Aliya Moldabekova, vice governor of the Central Bank of Kazakhstan, investments will begin in April to May.
Trial Phase Allocation Accounts for 0.5% of Reserves
While boldly proclaiming the purchase, Kazakhstan has demonstrated a cautious approach regarding its national reserves plan for cryptocurrency assets.
The consideration to initiate this has taken six months. As early as July last year, Central Bank Governor Timur Suleimanov stated that they were considering investing part of the foreign exchange reserves and national fund assets into cryptocurrency, emphasizing that this is a complex issue that requires caution, as such assets may bring high returns but also come with high volatility.
It was not until January this year that Timur Suleimanov confirmed the allocation of $350 million in initial funding for this special fund. This capital will be allocated using part of the foreign exchange and gold reserves.
Furthermore, the investment methods will be relatively diversified. Suleimanov mentioned in a rate briefing: “We are currently compiling an investment list that not only includes cryptocurrencies themselves but primarily consists of stocks of high-tech companies related to cryptocurrencies and digital financial assets, index funds, and other tools that share similar dynamic characteristics with cryptocurrencies.”
Vice Governor Aliya Moldabekova emphasized, “We are not looking to make large-scale investments in cryptocurrency. We are currently screening companies engaged in digital asset business, such as those involved in cryptocurrency infrastructure development. We are working on the screening of such companies.”
At the same time, the scale also reflects a “cautious” style, as the allocation of $350 million accounts for only 0.5% of the country’s overall reserves. As of February 1, the Central Bank of Kazakhstan's gold and foreign exchange reserves amounted to $69.4 billion, and the total assets of the national fund were $65.23 billion.
Easing Cryptocurrency Regulation and Incorporating Law Enforcement Seizures into Cryptocurrency Fund
Notably, the cryptocurrency assets in reserves do not all come from purchases; some also originate from law enforcement seizures.
In January this year, the National Investment Company (NIC) of the Central Bank of Kazakhstan announced plans to use cryptocurrencies seized by law enforcement agencies, along with foreign exchange and gold reserves, to enhance national cryptocurrency reserves.
Kazakhstan President Kassym-Jomart Tokayev revealed that law enforcement agencies have closed 130 illegal exchanges in operations to “crack down on illegal mining,” seizing assets valued at over $5 million. The seized cryptocurrencies, including Bitcoin, will no longer merely serve as evidence but will be fully integrated into the national cryptocurrency fund.
According to Bitcoin Treasuries data, Kazakhstan currently ranks eighth among countries in terms of cryptocurrency reserves (including law enforcement confiscations), holding 3,544 coins.
Ranking of Governments and Countries by Bitcoin Holdings
Kazakhstan relaxed cryptocurrency regulations in January this year, clearly incorporating digital financial assets (DFA) as a new asset class under regulation and allowing their circulation within the country. It also permitted the establishment of cryptocurrency exchanges licensed by the central bank. Moreover, the central bank will formulate a list of cryptocurrencies that can be circulated and impose certain restrictions on cryptocurrency trading activities.
In the current macro context of the cryptocurrency bear market, Kazakhstan's use of up to $350 million in reserve funds to invest in cryptocurrency not only reflects sovereign recognition of cryptocurrencies but also somewhat boosts the market. PANews will continue to monitor the specific allocation of subsequent funds.
Related Reading: Is Venezuela’s $60 billion Bitcoin shadow reserve real or fake?
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