Kazakhstan is embarking on an ambitious initiative to integrate digital currencies into its economy with the planned launch of "CryptoCity." This pioneering pilot zone, announced by President Kassym-Jomart Tokayev during his speech at the Plenary Session of the Astana International Forum 2025, is designed to allow the use of cryptocurrencies for purchasing goods, services, and potentially more. The primary objective of CryptoCity is to explore cryptocurrency adoption within a carefully managed and regulated sandbox environment, paving the way for broader digital asset integration.

Elaborating on the vision, President Tokayev stated, "We are planning to create a pioneering pilot zone called CryptoCity where cryptocurrencies might be used for purchasing goods, services, and even beyond." This statement, published on the president's official website, underscores the government's commitment to exploring new financial technologies and fostering innovation within a controlled framework.

The push for CryptoCity comes amidst a broader effort to develop robust infrastructure for the legal circulation of digital assets in Kazakhstan, a need previously emphasized by President Tokayev in late January. Currently, the only avenue for legal cryptocurrency transactions is through exchanges licensed by the Astana International Financial Centre (AIFC). However, official estimates suggest that a mere 5% of Kazakhstani crypto investors utilize these regulated platforms, with the vast majority operating in the "gray zone." This unregulated activity is substantial, as evidenced by data from Kazakhstan’s National Bank indicating that citizens illegally purchased cryptocurrencies worth $15 billion in 2024 alone.

To address these challenges and formalize the burgeoning crypto sector, Kazakhstan’s National Bank is actively working on amendments to national legislation. These changes aim to legalize the operation of cryptocurrency exchange facilities within the country. Such facilities would be authorized to conduct cryptocurrency exchange transactions for a specified fee, and the regulator will also determine a list of permissible assets available for purchase. Furthermore, the National Bank has initiated the establishment of a regulatory sandbox, a crucial step for testing new financial technologies before they are introduced to the wider market.

Zhaslan Madiyev, Kazakhstan’s Minister of Digital Development, provided further insight into the practical implications of CryptoCity. He highlighted that "the concept is that cryptocurrency would be used as a means of payment — to pay in restaurants, cafes, buy real estate, make investments." Madiyev believes this initiative "could be a major breakthrough for the blockchain industry," signaling its transformative potential for the nation's financial landscape.

The search for a suitable location for CryptoCity is underway, with the government and regulators collaborating on the decision. According to Minister Madiyev, one city under serious consideration is Alatau, an initiative championed by the President. Alatau, a settlement near Kazakhstan's south-eastern border, was established in 1957 as a hub for scientific institutions. It currently houses the Institute of Nuclear Physics, the Kazakhstan National Nuclear Center (complete with an experimental nuclear reactor and cyclotron), and the Physics and Technology Institute. Additionally, Alatau hosts a special economic zone known as Innovation Technology Park, making it a strategically advantageous location where synergies with existing research and technological infrastructure could attract significant capital.

The overarching vision for CryptoCity is to foster an environment characterized by the free circulation of cryptocurrency, supported by crypto-friendly legislation and the recognition of crypto as a legitimate means of payment. Minister Madiyev emphasized that "these conditions need to be reflected in the law." The project also aims to attract a wealth of talent, including developers, programmers, and IT specialists, thereby stimulating local economic growth and positioning Kazakhstan as a forward-thinking nation in the digital age. While the city itself is reported to be under development, the primary focus remains on crafting a comprehensive regulatory framework.

Supporting this ambitious direction, Kanysh Tuleushin, the country’s first vice minister of digital development, has previously stated that Kazakhstan possesses the potential to become a leading crypto hub in Central Asia, provided that existing regulatory restrictions are eased. This sentiment aligns with the government's proactive steps towards creating a more conducive environment for digital innovation.

Kazakhstan's exploration of digital finance is not entirely new. In 2024, the country successfully launched a pilot project involving its central bank digital currency (CBDC). This project reportedly yielded tangible benefits, such as reducing wait times for value-added tax (VAT) refunds, demonstrating the practical advantages and a willingness to adopt and test new digital financial solutions. The CryptoCity initiative builds upon this foundation, representing a more expansive foray into the world of decentralized digital assets.