In an increasingly digitized world, former Soviet nations, like Kazakhstan, are making strides towards embracing the future of currency – the Central Bank Digital Currency (CBDC). Early hints of a digital foray bobbed up in 2021, however, the Central Bank of Kazakhstan was reticent about a determined pivot towards CBDCs until recently. A detailed proposal was presented to the nation’s Supreme Audit Chamber, marking a significant shift towards potentially launching a digital version of the fiat tenge. Interestingly, this major announcement was synchronized with the day Russia, a traditional ally and neighbour of Kazakhstan, initiated the pilot of its own digital ruble.
An encouraging factor in this digital saga is the similar vein of approach adopted by countries like Russia, Belarus, and Kazakhstan. Echoing sentiments expressed by its Moscow and Minsk counterparts, the Kazakh central bank emphasized that the CBDC serves as an ‘add-on’ and is not designed to oust cash or non-cash payment forms. Accordingly, the digital tenge, akin to the digital ruble, is touted to circulate as a ‘third form of currency’ and is expected to be operational offline.
Undeniably, such strides into digital currencies are motivated by the aspiration to ‘modernise and develop’ payment systems while aligning with nations operating at the forefront of this digital revolution. Interestingly, Kazakhstan proposes a ‘three-stage launch’ for its token with the expectation of full implementation by 2025. This projected deadline tallies with the ‘2025 to 2027’ timeline Russia’s central bank officials are hinting at for their own CBDC.
However, despite this forward movement, digital currencies have hit choppy waters in Kazakhstan. For instance, while Kazakhstan has carved out a reputation as a significant crypto mining player with miners contributing $7 million in taxes last fiscal year, crypto miners also bear a portion of the blame for major power shortages in recent years. This in turn has pushed the government to hike electricity charges for crypto miners.
In the midst of these variables, the past year saw the Binance exchange behemoth initiating a regulated trading platform in this Central Asian country. Adding to the CBDC momentum, the Central Bank Governor had voiced last year the latent existence of plans for a digital version of the tenge.
The seeming influence of Moscow and Minsk’s actions undeniably loom over Astana’s CBDC progression. Confirmed by Russian banks on August 16, employees had successfully performed ‘real-world’ digital ruble transactions as Moscow eagerly prepares for its own coin’s launch. Hence, one can only watch this absorbing CBDC saga unfold in the coming years.