Kazakhstan National Bank will integrate its central bank digital currency (CBDC) on Binance's blockchain network called the BNB chain. The founding father and CEO of Binance, Changpeng Zhao, announced on Twitter that the network would be a significant component of Kazakhstan's latest Web 3 endeavour. The Central Asian country has strengthened its presence with Binance by having AIFC Financial Service Authority AFSA, allowing it to operate a digital asset platform and provide services to Kazakhstan consumers.
The Binance CEO tweeted that the National Bank of Kazakhstan (NKB) will integrate their CBDC into the BNB chain. In a series of tweets, CZ disclosed that after it was awarded the regulatory approval, the firm met with the First Deputy Governor of the National Bank of Kazakhstan (NKB), Financial Technologies Development Center, and Berik Sholpankulov and Binur Zhalenov, the head of the bank's Payment. He added that they introduced them to the BNB chain community to deliberate testing integrating their CBDC (Digital Tenge) with the BNB chain. CZ also shared that the NBK has already set in motion a pilot version which included the participation of local merchants and consumers in a controlled environment. In another tweet, CZ said that the bank had secured Binance as a partner for further advancing use cases to bridge the gap between traditional banking and the crypto market.
The testing process
The pilot was tested with two of the country's largest commercial banks: Eurasian Bank JSC and Kaspi Bank JSC. Kazakhstan's central bank oversees the entire system, while the smaller banks open digital tenge wallets, which allow users to exchange and redeem digital tenge and make interbank transfers. The Central Bank of Kazakhstan also clarified that the CBDCs are not intended to replace cashless or cash payments. This means that the digital tokens will not be recorded in the bank's balance sheets; instead, they will be recorded in the user's digital wallet.
Kazakhstan's government and the central bank have good relations with Binance. In August of 2022, Binance was granted in-principle approval to operate as a digital asset trading facility and provide services in Kazakhstan's Astana International Financial Centre. This led to Binance being granted a permanent licence in October 2022 by AIFC Financial Service Authority AFSA to operate a digital asset plan and provide custody services in Kazakhstan. The licence gives Binance the status of regulating platforms in Kazakhstan and attests to its robust compliance and security controls. The platform offers digital asset exchange and conversion services, withdrawal and deposit of fiat currencies, exchange trading and cryptocurrency custody.
In an effort to help fight crime in Kazakhstan, experts at Bitcoineer believe that Binance signed a memorandum of understanding with the local authorities (MOA) to observe wrongdoers closely if they use cryptocurrencies in their criminal activities, such as money laundering and terrorist financing activities. If any illegal activities are detected, such tokens will be blocked. During the Digital Bridge 2022 forum, President Kassym Jomart Tokayev announced that Kazakhstan intends to be a leading player in new digital technologies by creating a robust cryptocurrency ecosystem and regulating a transparent digital mining network.
According to the VP of Global Intelligence and Investigations at Binance Tigran Ghambaryan, the trading venue has a strong compliance program in the industry. It can carry out the tasks mentioned above. Ghambaryan said, «We express our appreciation to the Republic of Kazakhstan's Financial Monitoring Agency for their collaboration and devotion to many problems in the rapidly growing cryptocurrency industry.» The Binance team, including the CEO, has been vocal about its plans for crypto adoption worldwide. Recently Binance was able to help Ukraine preserve art in the digital world by hosting an NFT collection. Ukraine's Kharkiv Art museum has designated 15 works of art to be traded as NFTs entirely on Binance NFT as part of a compilation to support the museum's work. Binance has also been able to open two new offices in Brazil, which is regarded as one of the major crypto hubs for South Americans. Binance is also running a Law Enforcement Training Program (LETP) to combat cybercrime, and it is already installed in Italy, the UK, France, Norway, Canada, Brazil, Paraguay, Germany and Israel.
Some experts believe the collaboration is a bullish move that could positively affect the entire crypto industry. In contrast, others argue that such financial products (such as CBDCs) lack the merits of cryptocurrencies. However, Kazakhstan is taking steps to provide a safe space for crypto users by regulating it, while Binance offers support for the secure development of the country's digital market assets. Zhao's revealing of this partnership with Kazakhstan shows that the crypto environment is evolving, and Binance is at the forefront of it. All we have been seeing is Binance taking positive strides in the crypto industry and ensuring that it provides the security needed. We will continue to update you on any recent news concerning this partnership's progress.
