Kazakhstan Embraces CBDC ‘Digital Tenge’ with Pilot Launch

The National Bank of Kazakhstan has officially launched a pilot for its central bank digital currency (CBDC), marking a significant milestone with the incoming of the first retail payment using the digital tenge. The event, taking place on Wednesday, was commemorated with an official announcement. The central bank issued the first digital tenge on a platform that operates in a “pilot mode” with real users, including second-tier banks and their clients.

The CBDC platform will undergo rigorous testing of automated and blockchain-based smart contracts for settlements. Participating banks issued digital vouchers and cards, streamlining transfers for users. The announcement also signified the release of findings from a project exploring the issuance of a digital tenge in Kazakhstan.

Global financial institutions have consistently advocated for countries to enact legislation and conduct research into the issuance of national digital currencies. The head of the International Monetary Fund, Kristalina Georgieva, endorsed CBDCs as a potential replacement for cash and a catalyst for financial resilience in economies. However, many major economies have remained cautious about deciding on issuance.

Eyeing full implementation by the end of 2025, Kazakhstan has been preparing for a CBDC since 2021. Expanding its services, usage scenarios, and the environment of platform participants form the roadmap for the digital tenge’s roll-out.

The chairman of Kazakhstan’s National Payment Corporation (NPC), Binur Zhalenov, marked the official launch of the digital tenge by making the first transaction using a debit card linked to the CBDC account. Looking ahead, Zhalenov unveiled plans for the “massive platform’s development” in 2024, promising that the digital tenge will allow payments from anywhere in the world using Apple Pay, Samsung Pay and other such platforms.

Zhalenov highlighted the programmable potential of the digital tenge, suggesting its applicability in smart contracts, innovative financial services, and digital asset transactions. By 2024, the focus of the CBDC development will shift towards offline payments, and by 2025, the NPC plans to adopt the digital tenge for cross-border trade.

Launched in February 2023, the development of the digital tenge is now being led by the NPC, which was established in September. Concurrently, Kazakh authorities have heightened their scrutiny over the crypto market. Recent developments include issues with accessing major international crypto exchanges without a local license and the introduction of new tax rates on mining activities.