The National Bank of Kazakhstan’s investment arm has announced plans to boost its new national crypto reserve with coins seized from criminals.
National Investment Corporation, or NIC, the central bank’s investment subsidiary, said the bank will use “crypto seized by law enforcement agencies,” along with foreign currency and gold reserves, to beef up the fund, the Russian-language media outlet QAMS QazTrading reported.
The bank has already earmarked $350 million worth of overseas currency and gold for the fund, the corporation’s head, Timur Suleimenov, told media representatives on January 28.
The move comes as Kazakhstan seeks to revamp its efforts to become a Central Asian crypto hub in the wake of the 2022 turmoil.
At the time, crypto miners were blamed for massive power outages that left multiple areas with no electricity, sparking civil unrest and a crackdown on the country’s once-strong Bitcoin mining industry.
A $5m windfall?
The NIC says it has already opened a dedicated account for its crypto-related investments at the country’s Central Depository.
Initially, the NIC said it does not plan to buy or hold any crypto directly, but will instead look to make its purchases through hedge funds.
The body said it has created a shortlist of five hedge funds that handle crypto purchases, but did not reveal their identity.
The NIC will also broaden its scope by investing in crypto-specific venture capital funds, Suleimenov said.
The central bank may already have up to $5 million worth of crypto at its disposal, per a recent speech from Kazakhstan’s President Kassym-Jomart Tokayev.
Police in the country have so far shut down 130 illegal crypto exchanges with combined revenues of around $124 million, the President told the nation’s Financial Monitoring Agency.
As part of their investigations, officers have seized assets worth over $5 million, he said, although he did not disclose the exact nature of these assets.
“Money laundering and the illegal withdrawal of money through underground cryptocurrency operations have become a serious problem,” Tokayev said.
The President said the advertising for cash-for-crypto exchanges “continues on social media,” despite the crackdown.
“It appears the problem has not been resolved,” Tokayev said, “There are virtually no convictions for such crimes. Illegal capital outflow is a direct threat to economic security.”
Tokayev ordered the agency, Kazakhstan’s top anti-money laundering body, to “make specific proposals” on ways to fight crypto-powered crime.
