The government of Kazakhstan has blocked access to Coinbase trading platform in the country, citing violations of digital asset laws, a local media report says.
According to the reports, the ministry of Culture and Information said the action was related to crypto trading on the exchange which was contrary to the provisions of paragraph 5 of Article 11 of its Law on Digital Assets.
“The Information Committee of the Ministry of Culture and Information received a request from the Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan with a request to block the Internet resource www.coinbase.com, which violates paragraph 5 of Article 11 of the Law of the Republic of Kazakhstan On Digital Assets in the Republic of Kazakhstan,” the Ministry told local media.
The provision which was enforced in April says that the issuance and circulation of unsecured digital assets and activities of crypto exchanges are prohibited in Kazakhstan, except within the Astana International Financial Center (AIFC) territory.
AIFC is a fintech hub in Kazakhstan’s capital city with fewer initial regulatory hurdles that has an independent legal framework based on the law of England and Wales, and is also drafted to complement the regulations of the Dubai International Financial Centre.
The blocking of Coinbase was first reported in September, when a local Telegram community, Finance.kz, said that most websites of foreign brokers and crypto exchanges from Kazakhstan including Coinbase, Kraken and other large exchanges. do not open without using a VPN.
however, other websites such as those of Binance, Upbit and Bybit – which were licensed via an AIFC work permit issued by the Astana Financial Services Regulatory Committee – remain accessible.
Coinbase Remains Compliant
Coinbase like any other global crypto exchange has always said it is committed to compliance with regulations where it operates. Responding to the incident, a spokesperson for the exchange said:
“As part of Coinbase’s ambition to be the world’s most trusted and secure crypto platform, we strive to work collaboratively with policymakers and regulators. While this particular matter is still being investigated, the fundamentals remain: Coinbase is committed to compliance in all jurisdictions in which it operates.”
Hopefully, the block will be reversed as was the case with some firms in the past, including Interactive Brokers and NYMEX which were unblocked after similar restrictions were placed on them, without an AIFC license.
Coinbase’s Regulatory Challenges
Coinbase is one of the biggest crypto exchanges in the world, and the biggest in the USA where it still faces regulatory scrutiny from the securities and exchange commission (SEC). The case in the U.S is quite different though, as there are no clear rules guiding the operations of crypto exchanges.
The exchange has therefore contested the allegations of securities laws violations by the SEC, and now seeks support from lawmakers to ensure that proper regulation is put in place for the crypto industry as a whole.
Coinbase isn’t the only exchange that has come under the attack. Even Binance which is in right standing with Kazakhstan is facing similar allegations and the two exchanges are still in court since the lawsuit started in June.
Interestingly, the SEC threatens to extend its crackdown to other aspects of crypto, including decentralized finance (DeFi) despite the current lack of regulatory clarity facing the industry.