Digitalization in Kazakhstan: what to expect

If the 1990s were marked by the rapid development of the Internet and the 2000s by the development of social networks, the 2010s was defined by the integration of digital technologies into nearly every aspect of daily life. Its exponential growth and development became the main trend in the world economy.

Digital technologies provide unlimited access to a vast amount of information and instantly perform various operations to assist, improve, and accelerate many processes. Digitalization is merely a transition to the digital method of communication, fixation, and data sharing through digital devices.

Kazakhstan, like many other countries, is open to the development of this industry, and in 2017, the government approved and began developing Digital Kazakhstan – a government program aimed to accelerate economic development, to transition to the digital economy, and to improve the quality of life through digital technologies.

The beginning of the new decade in Kazakhstan was marked by an active discussion of innovations in digital technology and digitalization. With this in mind, Signum would like to draw attention to the following anticipated legislative amendments in this field.

Digital Assets

The anticipated legislative amendments will introduce the new concept of a “digital asset” as a legally defined asset that has a certain value and can be traded electronically. These include such sensational developments such as tokens, cryptocurrencies, and smart contacts. Although these technologies are widely known, they are not widely understood.

Most importantly, all of the assets are created digitally. The introduction of digital assets as a concept into Kazakhstani legislation is driven by the need to eliminate ambiguous interpretation of laws for this new form of asset. With this, everyone will be given an opportunity to better understand their rights and responsibilities related to the use of digital assets, to challenge the ownership of such assets, and the rights of their use and transfer.

After adoption of the amendment, the digital asset will be recognized as legal property, but it cannot be used as a means of payment, and it will not create any personal non- property rights for its owner.

•\tRobotics

At the moment, there is no legislation regulating robotics (the industry and their usage) in Kazakhstan. This situation leads to many problems involving robots, bots, and other forms of autonomous technologies. Regulation will not only establish the definition of the term “robot”, but it will also govern the relationship between the developer, the owner of the robot, and third parties, as well as establish liabilities for issues that arise while using the robot. As more and more robots replace people for routine tasks, it is necessary to codify this relationship.

•\tBlockchain

Essentially, blockchain is a continuous chain of digital information that keeps a record of online transactions. Blockchain technology already exists and is used in Kazakhstan, but it is not being regulated as of yet. In accordance with the planned changes, the legal definition of “blockchain” as a technological platform integrates blockchain technology into the existing regulations and the definition of data objects.

Advocates for the usage of blockchain claim that it will help resolve pressing problems such as corruption and financial fraud. It should be noted that blockchain will have a large impact on optimization of business processes and service provision to the general public in Kazakhstan.

•\tCryptocurrency

As of today, Kazakhstan is not ready to accept cryptocurrency as do many developed countries. Kazakhstan is currently discussing legislation that aims to prohibit issuance and circulation of cryptocurrency and other forms of private electronic currency with one notable exception. Cryptocurrency will be allowed to function in the Astana International Financial Centre (AIFC). If found to be effective, cryptocurrencies may be gradually introduced and accepted throughout Kazakhstan.

Digitalization is a process imposed by the necessity to modernize along with the rest of the world. Its development requires coordinated step-by-step actions. We need to understand that digitalization calls for solid technical support and highly qualified specialists to protect data and ensure safety in cyberspace. With timely updates to regulations on the important aspects of digital technologies, Kazakhstan has a chance to accomplish its visionary mission of becoming a technologically advanced country.

Please read our article in February edition of the Investors' Voice  https://drive.google.com/file/d/1v4US6kWZhbAx2jCxGHsKIAXT7lJVmj7t/view