Kazakhstan may launch its own Central Bank Digital Currency (CBDC) in 2022. The country, which is one of the largest countries in the world in terms of Bitcoin mining hash power, has been exploring the CBDC route.
According to a report by Kazinform, the Governor of the National Bank announced that the country may soon launch a CBDC pilot project. The digital Tenge project includes international partners and participants in the financial market.
Governor Erbolat Dossayev additionally noted a digital Tenge platform prototype is already complete. Final reports on the pilot project results will be published on December 15, 2021. However, he added that the Central Bank will make the final decision concerning introducing the digital Tenge in December 2022.
Kazakhstan’s Digital Currency
While speaking at the periodical government sessions, the governor shared that Kazakhstan aims to join the worldwide CBDC wave. Additionally, the pilot project aims to introduce financial innovations and develop the country’s economic digital structure.
The Tenge currency will approximately be worth $0.23. During the digital currency’s pilot programme, the National Bank will issue financial institutions with a token-based prototype. Consequentially, these institutions will provide CBDC payment services to citizens.
Despite the country’s active path in developing a CBDC, it’s yet to introduce its national currency’s digital representation. According to Dossayev, the central bank experts will decide whether or not to launch the digital representation in December 2022.
Kazakhstan’s Journey in Developing a CBDC
Kazakhstan’s local authorities began considering a national digital currency back in July 2020. It was not up until May 2021, when the country opened up a public consultation for its potential digital currency.
During the same period, the country published a report on running the digital currency pilot project, which the central bank dubbed the digital Tenge. According to this report, the digital Tenge would be a new form of money that would aid in fighting corruption in the country.
Additionally, the central bank was keen to mention that the digital currency would not replace cashless or cash payments. Instead, citizens would use the currency in parallel with the existing means of payment as an alternative. Moreover, Kazakhstan’s Central Bank added that the digital currency would increase competitiveness in the payments market.
More on Kazakhstan’s Dance with Crypto
As mentioned earlier, Kazakhstan is one of the countries in the world with the largest Bitcoin mining hash power. The country particularly experienced an influx of BTC miners after China had a crackdown on the crypto industry earlier this year.
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This particular crackdown in China led to the shutting down of many Bitcoin mining hubs, 26 major hubs to be exact. Bitcoin miners rushed to Russia, Kazakhstan, and the US following the ban.
Kazakhstan, in particular, seemed like an attractive destination for miners due to its proximity to China in addition to its cheap coal offering. According to data by the Cambridge Centre for Alternative Finance, after this great move, Kazakhstan’s hash rate reached 18.1%
These miners, however, may have to look for a new home yet again due to Kazakhstan’s strain with power supply. Miners in the central Asian country have been experiencing power cuts. The country’s government has currently placed limits on the energy-intensive mining industry.