The Ministry of Finance in Kazakhstan has announced measures to improve security and oversight in its IT department after catching four employees mining cryptocurrencies on its servers. Joking that the miners have taken over the central bank’s main duty – money emission, a deputy called for crypto regulations. The National Bank is actually working on proposals to regulate the crypto sector but is not planning a ban.
Also read: Kazakhstan, Kyrgyzstan, and Uzbekistan on the Crypto Radar
State Computers Used to Mint Digital Coins
IT specialists working for the Finance Ministry in four different regions of Kazakhstan have been implicated in using government hardware to mine cryptocurrencies. They were employed by local offices of the ministry’s Department of State Revenue, investigators said, quoted by Tengrinews. The miners have been exploiting the servers of the tax authority and the most powerful personal computers available to employees.
“They have secretly installed mining software, which significantly decreased the speed of information processing and slowed down government computers”, Kazakhstan’s National Security Committee (KNB) said in a press release. “These programs have been added to the exceptions lists of antivirus applications”, the agency explained.
“Criminal investigations have been launched against four employees of different regional divisions. KNB is in charge but we have started an internal inquiry, as well”, said Ardak Tangebaev, head of the Department of State Revenue. “We are going to tighten control over our IT departments”, he added.
The employees have been charged with “impeding the work of information systems and telecommunications networks” and “creation, use or distribution of malicious computer programs and software products”. It is quite obvious that the current articles of the penal code do not specifically cover crypto-related crime.
“Mining Under Your Nose”
Kazakhstan’s financial authorities have been criticized for slowing down the introduction of regulations in the cryptocurrency sector. A deputy joked that the IT workers at the Finance Ministry have taken over one of the main responsibilities of the National Bank – emitting money. “They are mining under your nose and prosecutors have no idea about what charges to raise”, Gleb Shchegelskiy said, calling for crypto regulations in Kazakhstan.
The central bank is actually working on a set of legislative proposals. New restrictions on operations with cryptocurrencies, like bitcoin, and their exchange with the local fiat tenge are to be imposed soon, according to NBK’s chairman Daniyar Akishev. “The situation indicates a necessity to toughen the requirements for the use of cryptocurrencies. We believe it is expedient to introduce legal restrictions”, he said, quoted by Kaztag.
The measures are expected to affect cryptocurrency transactions and payments. Akishev added that the “appropriate amendments” are currently being prepared. Like many of his colleagues around the world, he warned Kazakhs about the risks of investing in cryptocurrencies.
A Look on the Bright Sight
Despite all that, Kazakhstan remains a country with long-standing ambitions to become a crypto hub in the region. Last year Astana announced intentions to create “the most favorable business climate” for fintech companies with a “highly progressive regulatory framework”. In 2018 the country’s leadership called for the launch of a “democratic, transparent and global cryptocurrency… backed by assets”. Kazakhstan’s financial authorities, however, are still struggling to grasp the realities of a rapidly developing crypto industry, justifying the latest criticism.
For now, the National Bank of Kazakhstan is not planning to impose any bans on cryptocurrencies, entrepreneur and co-founder of KazFinTech Alexey Sidorov told news.Bitcoin.com. The positive news came from a round table discussion on crypto regulations in Almaty. “Expert Update” gathered representatives of local blockchain and fintech associations and the central bank. Unfortunately, legalizing cryptocurrency as a means of payment is not considered by NBK at the moment, the event revealed.
More than 1,000 investors, miners, startups and representatives of the blockchain industry took part in Cryptoconference-2018 in Almaty last week and shared their expectations for the near future. “If 2017 was the year of ICOs, 2018 will be the year of regulation”, Streamity’s representative Sergey Kolomiets told Tengrinews. The president of the Kazakhstani Association of Blockchain and Cryptocurrencies, Eset Butin, confirmed his prediction: “I think China is never doing anything just like that. In 2018 the PRC will decide about the crypto sector”. Participants in a panel discussion on the regulatory challenges in the Commonwealth of Independent States agreed that the industry needs regulations, not restrictions.