The Procedure For Registering A Crypto Company In The AIFC – Technology – Kazakhstan


The electricity price, legislation and location of Kazakhstan
makes the country a potential world leader in crypto mining. The
government is actively involved in adapting existing laws to
improve the possibilities for the existence of various types of
crypto companies in the country.

However, at the moment, the legislation of Kazakhstan prohibits
the circulation of cryptocurrencies, but crypto mining is not
prohibited by law. In June 25, 2020, the President of Kazakhstan
signed the Law of the Republic of Kazakhstan “On Amendments
and Additions to Certain Legislative Acts of the Republic of
Kazakhstan on the Regulation of Digital Technologies”, which
officially legalises crypto mining in Kazakhstan. A fee for miners
has been established in the amount of one tenge per 1 kWh of the
consumption amount of electricity, will come into force on January
1, 2022.

Recently, the foreign crypto companies are actively registering
their subsidiaries. One of the ways is to create a legal entity in
the Astana International Financial Center (hereinafter – the
“AIFC”). The rules of the AIFC allow the
registration of crypto companies and other regulated activities
based on digital assets.

Moreover, it has a special legal regime in the financial sector,
with different types of tax incentives, depending on the financial
services provided, and an independent judicial system to consider
possible disputes between companies. In this article, we will
review the process of registering crypto companies in the AIFC.

There are 16 types of legal structures available, crypto
companies may choose one out of 10 types of legal structure.
 Let us review the example of registering a Private
Company.

The procedure for registering

In order to operate on the territory of the AIFC, crypto mining
companies (Private company) need:

– authorisation / In-Principal Approval;

– register legal entity;

– obtain a license to provide financial services.

Stage 1:  Authorisation / In-Principal
Approval

The Astana Financial Services Authority (AFSA) issues three
types of licenses: Regulated activities, Market Activities and
Ancillary services. Licenses determine the type and scope of
financial services that a firm is allowed to provide. In our case,
the crypto mining companies fall under Market Activities type.

The authorisation process helps the AFSA in identifying,
preventing serious misconduct or harm, and ensure that firms and
individuals meet threshold conditions.

During this stage the applicant submits the application forms
and supporting documents listed in the Documentation Checklist
section of the applications.  The AFSA considers the
application and provide preliminary comments.

The purpose of this stage is the preliminary approval of the
possibility of obtaining a license by the applicant. To save time
and recourses for all parties, the AFSA reviews all applicant
documentation for compliance with the AIFC requirement before
starting the licensing process. If there are any remarks or
comments on the applicant’s documentation, the AFSA gives time
to eliminate the inconsistencies and resubmit the documents.

If the application is successful, the AFSA will notify the
applicant of the status of the application and issue a letter of
In-Principal Approval.

Stage 2:  Company registration

To apply for registration of a crypto mining company with the
legal structure of a Private Company, the applicant provides the
following information:

– Application for legal name reservation – must be accompanied
by the prescribed fee set out in the AIFC Legal Acts from time to
time.

 – Articles of Association – one of the constitutional
documents of a company, which sets out the basic management,
administrative structure and corporate governance of the
company.

– Partnership Agreement – written agreement that records the
matters agreed between the partners in relation to the internal
workings of the partnership.

– Registered office address – physical location to which all
communications and notices may be addressed. Registered address
must be located in the AIFC territory in Nur-Sultan city.

– Authorised signatory – a person authorised to act on behalf of
the legal entity in matters related to its operation. This
authority may be granted by issuing a resolution or a power of
attorney, a copy of which must be submitted to the Registrar of
Companies along with the application to register a legal
entity.

– Directors – the first directors of a Company must be elected
by the Incorporators. A Private Company must have at least one
director.

– Chief Executive Officer – natural person and has an Individual
Identification Number, appointed by the Shareholders or Directors.
The Chief Executive Officer shall have the broadest powers to act
in all circumstances in the name of the Company.

– Company Secretary – an officer appointed by the directors of a
Company as responsible for ensuring that Company’s corporate
administration obligations under the AIFC Legal Acts are complied
with.

– Beneficial Owner – body corporate – shareholder/partner are
required to provide details of its beneficial owner who holds more
than 25% of shares /ownership.

– Resolution – the registration application must be accompanied
by a copy of the resolution signed by each of the shareholders /
partners of the proposed legal entity.

– Anti-Money Laundering – complete the questionnaires in
relation to Anti-Money Laundering section.

To register a legal entity with the AIFC, it has to pay the fee
in the amount of USD 300.

After checking the submitted documents, the applicant receives a
Certificate of Registration.

Stage 3: License

Issuance of a license is the final stage for establishing a
crypto company in the AIFC. Before applying for a license, the
company must pay the fee in the amount of – USD 5,000 -
125,000.

After reviewing all comments, making the appropriate changes and
receiving the Certificate of Registration, In-Principal Approval,
the applicant submits whole set of documents. On this basis, the
final decision on the issuance of a license is made. After
obtaining a license, the applicant has the right to carry out his
activity.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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