Kazakhstan Looks to Tighten Rules for Crypto Exchanges After FTX Collapse
The Astana Financial Services Authority is seeking market feedback on new rules targeting operational resilience and separation of customer assets.
Kazakhstan's crypto regulator has proposed new requirements for regulated digital asset exchange platforms targeting the segregation of customer assets and risk mitigation after the collapse of FTX revealed poor governance and conflicts of interest.
The Astana Financial Services Authority (AFSA) published draft "enhancements" to its crypto exchange licensing framework Digital Asset Trading Facility (DATF) for public feedback on Monday after the regulator noted its existing rules and "ongoing supervision" of crypto exchanges revealed "contradictions, inefficient provisions, and uncertain definitions."
The new measures target the safekeeping and segregation of customers' assets after the collapse of Sam Bankman-Fried's crypto enterprise made way for allegations that funds were commingled between his exchange FTX and trading arm Alameda. AFSA's proposed rules also cover checks on liquidity risk, proper disclosure and risk of arbitrage.
Kazakhstan, which emerged as a hub for crypto mining after China's crackdown on the industry, has been setting up controls for mining while also seeking to boost the broader digital asset space with new regulations. Crypto exchange Binance, which is licensed in the country, has been working with the country's Astana IT park to "integrate banking infrastructure within the cryptocurrency market."
The existing DATF regulatory regime requires AFSA to approve the crypto assets available for trading on licensed exchanges. A new measure proposes a criteria-based process that adds to a “green list” of approved tokens.
"Overall, the regulatory framework is at the early stages of the development and there is a need to observe how the measures of the DATF framework will work in practice," AFSA said of the proposals.
The proposal is open to public comment through Feb. 25.
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