Kazakhstan’s central bank is considering an investment of up to $300 million in cryptocurrency assets, but it’s taking a cautious approach following recent market volatility. The National Bank of Kazakhstan (NBK) announced that the allocation, which could range from $50 million to $300 million, would come from its foreign exchange reserves.

NBK Chairman Timur Suleimenov stated that the bank would wait for market conditions to stabilize before committing capital. The announcement came after a significant market downturn saw the total cryptocurrency market capitalization shrink by $500 billion. Suleimenov emphasized the difficulty of achieving profitability during a sharp decline, telling reporters the bank would “let the dust settle” before making any investment decisions.

A Measured Approach to Digital Assets

The NBK already has an investment portfolio within its gold and foreign exchange reserves that includes high-tech stocks and financial instruments tied to digital assets. Despite having the framework in place, Suleimenov confirmed the regulator wouldn’t rush to deploy funds until favorable opportunities arise.

This careful strategy involves investing through exchange-traded funds (ETFs) and stocks in crypto companies rather than purchasing tokens directly. The plan is part of a broader vision articulated by President Kassym-Jomart Tokayev, who has called for the creation of a state-backed crypto reserve fund to accumulate strategic digital assets.

Building a National Crypto Infrastructure

The proposed investment is the latest step in Kazakhstan’s effort to build a comprehensive digital asset ecosystem. In September, the country launched its first national crypto reserve, the Alem Crypto Fund, which selected BNB as its initial holding through a partnership with Binance Kazakhstan.

Kazakhstan has also been progressive on other fronts. In August, it launched Central Asia’s first spot Bitcoin ETF, which trades on the Astana International Exchange. The following month, the Astana Financial Services Authority established a framework allowing companies to pay regulatory fees using U.S. dollar-pegged stablecoins, streamlining transactions for licensed Digital Asset Service Providers.

Balancing Innovation with Enforcement

While fostering institutional adoption, Kazakhstan has also intensified its crackdown on illicit crypto activities. In October, authorities shut down 130 illegal crypto exchanges and seized $16.7 million in virtual assets believed to be linked to criminal proceeds. These enforcement actions reflect the country’s evolving regulatory landscape, which has seen its share of global Bitcoin mining decrease from 27% in 2021 to just 4% by 2023 due to grid strain and new rules.

Looking ahead, President Tokayev has announced plans for “CryptoCity” in Alatau, a pilot zone designed to integrate crypto payments into daily life. Meanwhile, the country’s central bank digital currency, the digital tenge, is scheduled for a full rollout by the end of the year, though the final timeline remains uncertain.