Fintech and payment companies in Kazakhstan are raising concerns about a proposed law to regulate gambling transactions, which includes the establishment of a new monopoly entity, the Unified Accounting System (UAS).
The proposed legislation, currently in its final reading, seeks to create the UAS to manage market participants, process payments, maintain a single electronic wallet and handle settlements with clients. The UAS would also impose up to 1.5% commission on all transactions, in a market where regulated transactions exceed 1.2trn tenge (US$2.6bn) annually.
This proposal is reminiscent of the previously considered Betting Accounting Center (BAC), which was withdrawn in 2021 following a corruption scandal involving a Vice-Minister. Critics highlight the lack of transparency regarding the UAS’s structure and ownership.
The introduction of the UAS occurred during the second reading of the legislation, bypassing comprehensive impact analysis. Opponents argue that this process has prevented adequate scrutiny of the potential economic and regulatory implications.
The National Bank of Kazakhstan, the country’s central bank, opposes the UAS, noting that it would duplicate existing regulatory functions without enhancing transaction security or consumer protection. The central bank has prepared its own reform proposal that does not include the introduction of a monopoly entity.
Kazakhstan’s payments industry has also presented an alternative reform plan, which has been overlooked. Representatives from the industry caution that the proposed legislation could disrupt the payments sector, reduce competition and negatively impact Kazakhstan’s business environment.
A spokesperson for Kazakhstan’s payments industry stated: “The proposed legislation would be a step backwards for Kazakhstan, harming competition in the country’s vital payments sector and signalling to the outside world that necessary business reform is being driven by shadowy interests, rather than what’s right for industries and consumers.”
This legislative debate occurs against the backdrop of Kazakhstan’s ongoing efforts to regulate and control online gambling. In 2021, the government blocked access to LinkedIn due to online casino advertisements, reflecting its strict stance on gambling-related activities.
As discussions continue, stakeholders from the fintech and payment sectors advocate for a balanced and transparent regulatory approach to ensure market stability and consumer protection.
