Coinbase Accused of Crypto Law Violations, Faces Blockage in Kazakhstan

Kazakhstan's Ministry of Culture and Information recently declared the blocking of several prominent domestic financial websites, including Coinbase, Interactive Brokers, and the New York Commodity Exchange (NYMEX).

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Coinbase Encounters Obstacles in Kazakhstan Over Alleged Crypto Law Violations

Kazakhstan’s Ministry of Culture and Information recently made headlines by announcing the blocking of several well-known financial websites operating within the country. Notable platforms affected by this action include Coinbase, Interactive Brokers, and the New York Commodity Exchange (NYMEX). This move is a response to alleged violations of Kazakhstan’s digital assets regulations, along with the identification of fraudulent activities.

The Ministry of Culture and Information claimed that the restriction imposed on Coinbase is a direct result of the exchange’s cryptocurrency trading activities, which were found to be in conflict with Article 11, Paragraph 5 of Kazakhstan’s Law on Digital Assets.

Reportedly, the Ministry of Culture received a request from the Ministry of Digital Development, Innovation, and Aerospace Industry to block access to Coinbase, citing the exchange’s non-compliance with the country’s regulations.

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The decision to block Coinbase was carried out in accordance with the Communications Act, which mandates internet service providers to restrict access to websites hosting prohibited information. In addition to Coinbase, Interactive Brokers and NYMEX also faced similar restrictions.

The Ministry of Information clarified that Interactive Brokers had been included in the “Cyber Supervision” system database by the Agency for Regulation and Development of the Financial Market (ARRFR), suspecting their involvement in financial pyramid schemes and other fraudulent activities.

Related: Indian Authorities Detain 8 More Individuals, Including 4 Police Officers, in $300 Million Crypto Scam

As for NYMEX, the exchange’s provision of futures trading for Bitcoin (BTC) and Ethereum (ETH) outside of the jurisdiction of Kazakhstan’s International Financial Center “Astana” (AIFC) was cited as the reason for blocking access to their website, based on violations of communication laws.

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However, due to public outcry and mounting pressure from financial experts, access to Interactive Brokers and NYMEX was eventually restored.

Regulatory Confusion Surrounding Cryptocurrency in Kazakhstan

According to the report, Kazakhstan’s International Financial Center (AIFC) is the sole region in the country where trading in “unsecured digital assets” is allowed. Several cryptocurrency exchanges, including Binance, CaspianEx, Biteeu, ATAIX, Upbit, Xignal & MT, and Bybit, have secured operating licenses within Kazakhstan.

However, it is worth noting that a work permit for the AIFC is issued by the Astana Financial Services Regulatory Committee (AFSA), and it appears that NYMEX does not possess such authorization.

The recent blocking of foreign brokers and cryptocurrency exchanges in Kazakhstan has left financial analysts perplexed. Some speculate that the blocking may have been a technical error, suggesting that certain internet protocol (IP) addresses were “inadvertently” included in the list of resources to be blocked.

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Interactive Brokers, a well-known American brokerage firm recognized for operating one of the largest electronic trading platforms in the United States, is regulated by various financial authorities, including the US Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE). The company caters to a diverse clientele, both institutional and individual, offering access to a wide range of financial instruments, including cryptocurrencies.

In the grander scheme of things, the recent blocking of Coinbase, Interactive Brokers, and NYMEX underscores the intricate challenges associated with regulating digital assets in Kazakhstan.

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As the country continues to grapple with this ever-evolving landscape, it becomes increasingly evident that further clarity and ongoing dialogue between regulatory bodies, financial institutions, and industry participants are essential to create a balanced and secure environment for cryptocurrency trading and investment.

It’s also worth noting that Coinbase’s stock, traded under the ticker symbol COIN, has experienced a notable uptrend since October 27, with its value rising from $71 to $86 during this period.

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