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Kazakhstan is making notable progress in its journey towards introducing a Central Bank Digital Currency (CBDC), following in the footsteps of other ex-Soviet nations exploring the realm of digital currencies.

According to Telesputnik, the country’s Central Bank has presented a comprehensive proposal for a digital tenge to the Supreme Audit Chamber.

Although initial trials for a CBDC were initiated in 2021, the bank had earlier shown hesitance towards a full-blown launch. However, this new proposal indicates a stronger inclination towards the release of such a coin, potentially accelerating its introduction.

Interestingly, the bank’s announcement coincides with Russia, a historically close ally of Kazakhstan, initiating trials for its own digital ruble. Additionally, Belarus, another ally, recently declared plans to launch a digital currency.

The verbiage used by Kazakhstan’s Central Bank mirrored that of its Russian and Belarusian peers. Emphasizing the digital tenge’s role, the bank stated it wouldn’t replace cash or electronic payments, but would rather coexist as a “third form of currency.” The digital currency, akin to Russia’s digital ruble, will also have offline accessibility.

The bank envisions the CBDC as a tool to “modernize and enhance” payment systems, which aligns with their previous statements on this subject. They’ve projected a “three-stage” rollout for the digital tenge, aiming for its full deployment by 2025. In comparison, Russia’s central bank hinted at the widespread usage of their coin between 2025 and 2027.

Understanding Kazakhstan’s Stance on CBDC and Cryptocurrency

Cryptocurrency has seen a spectrum of developments in Kazakhstan. The country has emerged as a prominent player in crypto mining, resulting in crypto miners contributing $7 million in taxes in the previous fiscal year. Recently, Binance, a leading crypto exchange, established a regulated trading platform there.

However, cryptocurrency has also been a scapegoat for significant power outages in the country, leading to increased electricity tariffs for miners this year.

In the past, the Central Bank’s Governor mentioned potential plans for a digital tenge. The bank highlighted its commitment to developing a framework for making decisions regarding the CBDC.

But current developments in neighboring nations like Russia and Belarus seem to have catalyzed Kazakhstan’s momentum. Recent reports from Russian banks on August 16 indicate their successful execution of real-world transactions using the digital ruble, as Russia speeds up its own CBDC launch.