Kazakhstan Cracked Down on 36 Illegal Crypto Exchanges

The Kazakhstan government has cracked down on 36 illegal crypto exchanges in 2024. The government’s Financial Monitoring Agency (FMA) is responsible for this operation. The Ministry of Culture and National Security Committee also participated in the crackdown. Terror financing, money laundering, and other illegal activities are possible with cryptocurrency exchanges because of weak or ambiguous regulations. Most of these illicit crypto exchanges never had any credible licenses and lacked standard security features. A licensed trading platform automatically reduces legal hassles for users and ensures safe and secure transactions. 

Dangerous Activities of Illegal Crypto Exchanges

The role of illegal crypto exchanges is making headlines because some of their activities are dangerous. The most common criterion for declaring a crypto exchange is that they do not have the required documentation and licenses to operate. The basic requirements for opening a crypto exchange involve fulfilling mandatory KYC procedures. Usually, illegal crypto exchanges may fudge real facts about their users to encourage illegal financing. Cybercriminals, drug traffickers, and money launderers often capitalize on these exchanges because it ensures their online anonymity. In one incident in 2023, the Israeli police froze cryptocurrency accounts for Hamas. 

Impact of Ongoing Crackdown

Kazakhstan has a vast number of regulations. In 2023, the FMA was responsible for restricting access to over 980 unlicensed exchanges. The authorities cited that these exchanges were responsible for money laundering and other illegal activities. The government’s policy in this matter is very clear and wants to promote secured trading with cryptocurrencies. In 2024, the government agency simultaneously targeted cryptocurrency pyramid schemes. They helped in returning a sum of $545,000 and froze another $120,000. 

Positive Impact on Legal Cryptocurrency Exchanges

There is a strand of aggression displayed by the Kazakh authorities on illegal crypto exchanges. This is having a direct positive impact on several legal cryptocurrency exchanges. For example, Upbit, ByBit, and Binance are running smoothly in the country. This also shows that the government is not hostile towards the concept of decentralized finance (DeFi) and encourages genuine legal exchanges. This underscores the importance of licensing. Similarly in India, although the crypto regulations are virtually non-existent, it is highly advantageous to choose a regulated cryptocurrency trading platform in India such as Valco Trading to avoid legal complications altogether. 

In the context of Kazakhstan, the operational licenses are sought from the Astana Financial Service Authority (AFSA). The organization makes a sharp distinction between a licensed exchange and an unlicensed one. While it is supportive towards the former, it also has an uncompromising intolerant attitude towards the latter. The other major positive impact is that the authorities have managed to make the cryptocurrency sector remarkably safer after these crackdowns. 

Also Read: Know the Crypto Income Tax Rules of India Before Trading

Global Crypto Regulations Will Become Clearer

The Kazakh government’s relatively transparent policies towards cryptocurrency exchanges can have a ripple effect on the international market. The other countries having no clear policies or lenient regulations may be forced to change their policy forever. Moreover, it will ensure better transnational cooperation to minimize fraud and reduce money laundering. Additionally, it will persuade cryptocurrency exchanges to become more transparent and ensure a clean and secure environment.

Bottom Line

The crackdown should be viewed positively by crypto enthusiasts. It is really commendable that the government of Kazakhstan has adopted a strong policy towards cryptocurrency transparency. It will serve as a precedent for other countries to follow. Moreover, the impact of crackdowns will ensure money laundering and terror financing becomes not only difficult but has punitive consequences. The crackdowns on illegal exchanges are a healthy sign of the growth of the international economy.