Digital Kazakhstan programme key to country’s development

The Astana International Financial Centre (AIFC) signed a memorandum of cooperation in October with EXANTE, a Maltese technology investment company, signalling their intention to cooperate on new digital projects.

The memorandum of cooperation confirmed the AIFC’s interest in blockchain technology, which is widely praised as one of the most significant economic developments of the past few years, and represented the first steps of progress between the AIFC and a company renowned for its expertise in bridging forward-thinking government institutions with new technologies.

One of the proposed projects is the AIFC’s adoption of a cryptocurrency platform named Stasis, which will serve as a foundation for “a new digital asset secured by fiat.” What this means is that a new digital cryptocurrency operating on a blockchain platform will be secured, supported and regulated by government decree, which in turn will be informed by experts in blockchain technology.

Through regulation, the AIFC will be able to mitigate the traditional risks associated with cryptocurrencies, whilst allowing investors to enjoy distinct benefits. For example, Statis will enable virtually instant payments with no risk of devaluation or hyperinflation for the digital asset, and as the CEO of Stasis Gregory Klumov noted, there will also be several indisputable advantages of “transparency, immutability… and reduced cost.”

Although this project has only just begun, getting to this stage is the culmination of much work by the Kazakh government, which has created a working group to develop rules and regulations for the digital assets market. Governor of the Astana International Financial Centre Kairat Kelimbetov himself praised “Astana’s leading financial regulators [who] have already commenced their work and are laying the foundation for Kazakhstan’s fin-tech ecosystem … [so that] the AIFC can become an international hub for blockchain operations.”

The memorandum of cooperation between the AIFC and EXANTE also represents a big step forward for the Digital Kazakhstan government programme. This state-led initiative was launched earlier this year and has seen departments throughout the Kazakh government engage in discussions and debates to facilitate interdepartmental and sector-wide efforts to modernise Kazakhstan’s economy.

The Digital Kazakhstan programme specifically aims to facilitate Kazakhstan’s digital modernisation by focusing on four key priorities: creating a high-speed and secure digital infrastructure; digital transformation within all appropriate sectors of the economy; government proactivity in digital affairs; and the development of competencies and skills to permit a creative and digital society. Implementation has begun throughout government, with institutions, departments and administrative bodies all encouraged to evaluate areas where digital transformation could have a positive impact on public services.

This has already yielded results. For example, the National Bank of Kazakhstan recently announced that it is exploring the creation of a mobile application for the population to conduct transactions to buy and sell securities using blockchain technology. In this instance, the underlying blockchain platform would be used for the accounting of executed deals and for ensuring the safety and inalterability of information on transactions, showing how new technologies can add security and reliability through untypical means.

There are also a number of larger projects expected to be launched over the next few years. Digital infrastructure initiatives, such as the creation of a technology hub where start-ups and entrepreneurs are given the resources to innovate and prosper, will bring tangible benefits to both the Kazakh population and the region more widely. All this will also directly contribute to Kazakhstan’s development at a time when it powers on in its trajectory into the world’s 30 most developed states.

Although news about cryptocurrencies and blockchain technology is often deemed inaccessible owing to its specialist terminology, the news of this prospective collaboration between EXANTE and the AIFC is significant in much broader sense. With appropriate consultation around its implementation and specialist counsel about proper legal regulation, the AIFC stands to be one of the first prominent institutions worldwide to incorporate blockchain technology in a regulated and intelligent manner.

At the same time, this is just a single example in a growing trend. Through these announcements and digital initiatives, we are seeing the Digital Kazakhstan programme solidify Astana’s role as regional hub for innovation, and Kazakhstan’s international standing as an adopter of the world’s newest technologies. Only time will tell what the future holds, but we can all be sure that the Digital Kazakhstan programme is going to play an important role in shaping it.