Kazakhstan Offers Crypto Users a Deal

Kazakhstan's president has signed a decree on measures to encourage and develop the digital asset industry. It introduces several incentives for crypto-related businesses, but one in particular caught my eye:

income earned by individuals from cryptocurrency transactions conducted through Kazakhstan-regulated infrastructure will be exempt from income tax.

This looks like a pretty shrewd move in the state's push to bring crypto under its control. Kazakhstan does not ban individuals from carrying out cryptocurrency transactions. If a Kazakh citizen swaps one crypto asset for another outside government-regulated infrastructure, they are not breaking any law.

But now that citizen faces a choice:

• keep custody of their own crypto and, when making swaps, send it from their own wallet and receive it back into their own wallet, as they can do on rabbit.io;
• or move all their crypto into wallets run by state-regulated providers, store it there, and route every transaction through those wallets.

Go the first route, and they may owe tax on any income from their crypto activity. Go the second, and their crypto sits under the control of providers answerable to the state - providers that could technically freeze it entirely or block certain transactions - but at least there is no tax bill.

It's a tough call. And the state, eager to bring crypto to heel, is offering it at just the right moment - while many crypto users still have not fully grasped its core advantage: the freedom to hold their own assets and control them without anyone's permission. Many still see crypto as nothing more than a speculative asset.