By: Felix, PANews
On March 6, Timur Suleimanov, the Governor of the National Bank of Kazakhstan, stated that the central bank plans to use part of its gold and foreign exchange reserves to invest in the crypto asset sector, with an amount of up to $350 million.
Although the specific asset categories and timeline for the investment have not yet been disclosed, according to Aliya Moldabekova, Deputy Governor of the National Bank of Kazakhstan, the investment will begin between April and May.
Pilot Phase Allocation Accounts for 0.5% of Reserves
Despite the high-profile announcement of the purchase, Kazakhstan has demonstrated a cautious approach in every aspect of its national reserve plan for crypto assets.
The consideration phase alone took six months. As early as last July, Governor Timur Suleimenov indicated that the central bank was considering investing part of its foreign exchange reserves and national fund assets into crypto assets, emphasizing that this is a complex issue requiring careful handling due to the high volatility of such assets, despite their potential for high returns.
It was not until January of this year that Timur Suleimenov announced that an initial fund of $350 million had been allocated for this special purpose. This fund will be deployed using part of the foreign exchange and gold reserves.
Additionally, the investment approach is relatively diversified. Suleimanov stated during an interest rate briefing: "We are currently compiling a list of investments, which includes not only cryptocurrencies themselves but also high-tech company stocks related to cryptocurrencies and digital financial assets, index funds, and other instruments with dynamics similar to crypto assets."
Deputy Governor Aliya Moldabekova emphasized, "We are not making large-scale investments in cryptocurrencies. We are currently screening companies engaged in the digital asset business, such as those involved in building cryptocurrency infrastructure. We are in the process of selecting such companies."
Furthermore, the scale of the investment reflects a "cautious" approach, with the $350 million allocation accounting for only 0.5% of the country's total reserves. As of February 1, the National Bank of Kazakhstan's gold and foreign exchange reserves stood at $69.4 billion, while the assets of the national fund totaled $65.23 billion.
Easing Crypto Regulations and Incorporating Seized Assets into Crypto Fund
It is worth noting that not all of the reserved crypto assets will come from purchases; proceeds from law enforcement actions will also be a source.
In January of this year, the National Investment Corporation (NIC), the investment arm of the National Bank of Kazakhstan, announced plans to use cryptocurrencies seized by law enforcement agencies, along with foreign exchange and gold reserves, to enhance the national crypto reserve.
Kassym-Jomart Tokayev, President of Kazakhstan, revealed that during operations to "crack down on illegal mining farms," law enforcement agencies have shut down 130 illegal exchanges and seized assets worth over $5 million. These seized crypto assets, such as Bitcoin, will no longer serve merely as evidence but will be fully incorporated into the national crypto fund.
According to data from Bitcoin Treasuries, Kazakhstan currently ranks eighth in the global ranking of national crypto reserves (including law enforcement seizures), holding 3,544 BTC.
Governments and Countries Ranked by Bitcoin Holdings
Kazakhstan eased cryptocurrency regulations in January of this year, explicitly classifying digital financial assets (DFA) as a new asset category under regulation and allowing their circulation within the country. It also permitted the establishment of crypto exchanges licensed by the central bank. Additionally, the central bank will formulate a list of approved cryptocurrencies for circulation and impose certain restrictions on cryptocurrency trading activities.
Against the current macroeconomic backdrop of a crypto bear market, Kazakhstan's use of up to $350 million in reserve funds to invest in crypto assets not only reflects further recognition of cryptocurrencies by sovereign states but also provides a certain boost to the market. PANews will continue to monitor the specific allocation of subsequent funds.
Related reading: Is Venezuela's $60 Billion Bitcoin Shadow Reserve Real or Fake?
