In a significant move towards digital finance, Kazakhstan has officially introduced its central bank digital currency (CBDC), the digital tenge, marking a new chapter in the country’s financial landscape. The historic first transaction using the digital tenge was conducted by Binur Zhalenov, the chairman of Kazakhstan’s National Payment Corporation (NPC), signaling the commencement of a new digital era in the nation’s economy.
The inaugural transaction and plans
The landmark transaction by Zhalenov was made during his speech at the XI Congress of Finance in Almaty on November 15. He utilized a debit card linked to a CBDC account for the payment, as reported by the local news outlet Kapital. kz. This event not only demonstrated the digital tenge’s functionality but also its integration into existing financial systems.
Zhalenov announced the official launch of the digital tenge in Kazakhstan’s retail market, outlining an ambitious roadmap for the currency’s development. The year 2024 is set to witness a significant expansion of the platform, with a focus on enhancing its capabilities and reach. The digital tenge, according to Zhalenov, has been developed in collaboration with major global payment networks like Visa and Mastercard, as well as local banks. This collaboration has enabled the integration of the CBDC into plastic cards, allowing for seamless payments globally, including through popular digital wallets like Apple Pay and Samsung Pay.
Furthermore, the programmable nature of the digital tenge was highlighted, underscoring its potential use in smart contracts, innovative financial services, and digital asset transactions. Looking ahead to 2024, the focus will shift to enabling offline payments, and by 2025, the NPC aims to incorporate the digital tenge in cross-border trade, thereby expanding its utility and scope.
Kazakhstan’s journey towards digital tenge
The development of the digital tenge commenced in February 2023, with an initial goal to launch it by 2025. The NPC, established in September, has been at the forefront of this initiative, steering the development and implementation of the CBDC. This rapid rollout of the digital tenge is a testament to Kazakhstan’s commitment to embracing digital transformation in its financial sector.
The introduction of the digital tenge is part of a broader strategy to modernize Kazakhstan’s financial infrastructure and align it with global digital trends. The CBDC is expected to offer several benefits, including increased efficiency in transactions, reduced costs, enhanced security, and greater financial inclusion. By leveraging blockchain technology, the digital tenge also promises to bring transparency and trust to financial transactions.
Regulatory developments and crypto market scrutiny
Parallel to the development of the digital tenge, Kazakh authorities have been closely monitoring and regulating the cryptocurrency market. Recent months have seen increased scrutiny over crypto activities in the country. In September, local media reported difficulties in accessing major international crypto exchanges like Coinbase and Kraken without a local license. This move indicates a tightening grip on the crypto market, ensuring compliance with local regulations and standards.
Additionally, in October, local crypto mining operators penned an open letter to President Kassym-Jomart Tokayev, requesting a reconsideration of the newly introduced tax rates on mining activities. This appeal reflects the growing concerns within the crypto community in Kazakhstan regarding the regulatory environment and its impact on the industry.
Conclusion
The launch of the digital tenge is a significant milestone for Kazakhstan, positioning it as a frontrunner in the adoption of digital currencies at a national level. As the country navigates this new digital landscape, the balance between innovation and regulation will be crucial in shaping a robust and dynamic financial ecosystem. The digital tenge not only represents a technological advancement but also a strategic move towards a more integrated, efficient, and modern financial system in Kazakhstan.
