Kazakhstan President Announces State Crypto Fund and Smart City Digital Payments

Kazakhstan is making bold moves in the digital currency world. President Kassym-Jomart Tokayev recently announced plans to create a government-backed cryptocurrency fund and build the world’s first fully digital city where people can pay for everything with crypto.

This puts Kazakhstan ahead of larger countries that are still debating whether their governments should invest in digital assets.

Kazakhstan plans to establish a State Fund of Digital Assets through its National Bank’s Investment Corporation. This fund will collect what the president calls “promising assets” in the new digital financial system.

The crypto reserve will come from two main sources. First, authorities will use digital currencies seized during criminal investigations. Second, the country will add cryptocurrencies from state-controlled mining operations. Kazakhstan currently accounts for approximately 13-14% of global Bitcoin mining hashrate, though this has declined from its peak of 27.3% in October 2021.

Kazakhstan has significant financial resources to support this initiative. The National Fund holds about $60 billion, mostly from oil revenues. Another state fund called Samruk-Kazyna manages $74 billion in state enterprises. The country’s total international reserves reached $104.7 billion in 2024.

The president confirmed plans for “CryptoCity” in Alatau, a southeastern city of about 52,000 people. This pilot zone will let residents and businesses use cryptocurrency for daily purchases like groceries, services, and even property.

Alatau offers unique advantages for this experiment. The city was established in 1957 as a research hub and houses major scientific institutions, including nuclear research facilities and an Innovation Technology Park special economic zone.

“This city will represent the future of Kazakhstan,” President Tokayev said in his annual address. The goal is to create the region’s first fully digitalized city where crypto payments become normal.

The CryptoCity project will operate as a regulated sandbox. This means authorities can test cryptocurrency use in real-world conditions while maintaining oversight to protect users and ensure compliance.

Kazakhstan’s central bank digital currency (CBDC), called the Digital Tenge, is already showing promising results. The National Bank successfully launched pilot projects using the digital currency for government financing in 2024.

The Digital Tenge helped fund construction of the Dostyk-Moynty Railway project. However, the 238 billion tenge figure ($467.8 million) referenced earlier actually relates to National Fund infrastructure financing, not specifically Digital Tenge transactions.

The digital currency works with major payment networks like Visa and Mastercard. Users can store it in plastic cards and use it through digital wallets like Apple Pay and Samsung Pay. The system also reduced wait times for value-added tax refunds.

Kazakhstan expects full Digital Tenge implementation by the end of 2025. This will include offline payment capabilities for areas with limited internet access and cross-border transaction features.

Kazakhstan has built comprehensive laws for digital assets, unlike many countries still working out crypto regulations. The government passed the Law on Digital Assets in April 2023, creating clear rules for cryptocurrency use.

The Astana International Financial Centre (AIFC) serves as a special economic zone where crypto trading is legal and regulated. Trading volume through AIFC-licensed exchanges jumped from $324 million in 2023 to $1.4 billion in 2024.

In September 2025, Kazakhstan became the first Central Asian country to allow regulated firms to pay government fees using stablecoins like USDT and USDC. This pilot program demonstrates the country’s commitment to practical crypto integration.

The government maintains strict controls to prevent illegal activity. Authorities shut down 36 unlicensed crypto exchanges in 2024 and require miners to sell 75% of their digital assets through licensed platforms.

Kazakhstan is following international trends while establishing regional leadership. Several countries, including Brazil and Indonesia, are exploring strategic digital asset reserves after the United States created plans for a crypto reserve under President Trump.

The country launched Central Asia’s first spot Bitcoin ETF in August 2024. Officials believe these initiatives will attract developers, programmers, and IT specialists to boost economic growth.

Kazakhstan’s approach balances innovation with regulation. The government prohibits cryptocurrency use for regular payments nationwide while creating controlled environments like AIFC and the planned CryptoCity for testing and development.

Kazakhstan expects to pass comprehensive digital asset legislation by 2026. This timeline aligns with the full rollout of the Digital Tenge and the development of CryptoCity in Alatau.

The country’s strategy combines three key elements: government crypto reserves, practical CBDC implementation, and real-world testing through smart city development. This comprehensive approach positions Kazakhstan as a model for other emerging markets considering similar digital finance initiatives.

With proven technology, strong legal frameworks, and clear political support, Kazakhstan is building the foundation for widespread cryptocurrency adoption while maintaining the oversight needed for financial stability.