Fintech and payment companies in Kazakhstan are raising concerns about a proposed law to regulate gambling transactions. It includes the establishment of a new monopoly entity, the UAS or Unified Accounting System.
Now in its final reading, the proposed legislation 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 a 1.5% commission on all transactions. This is in a market where regulated transactions exceed 1.2 trillion tenge or US$2.6 billion yearly.
This proposal is similar to the recent considered BAC or Betting Accounting Center. Following a corruption scandal involving a Vice-Minister, they withdrew it in 2021. Critics highlighted the lack of transparency about the UAS’s structure and ownership.
During the second reading of the legislation, the introduction of the UAS happened. It bypassed comprehensive impact analysis. Opponents argue that this process has prevented adequate scrutiny of the potential economic regulatory implications.
The country’s central bank, The National Bank of Kazakhstan, opposes the UAS. They noted that it would duplicate existing regulatory functions without enhancing transaction security or consumer protection. Its own reform proposal does not include the introduction of a monopoly entity prepared by the central bank.
The payment industry of Kazakhstan has also presented an alternative reform plan, which has been overlooked. The industry’s representatives caution that the proposed legislation could disrupt the payments sector, reduce competition and negatively impact the business environment in Kazakhstan.
A spokesperson from Kazakhstan’s payments industry stated that the proposed legislation would represent a step backwards for the country, harming competition in its crucial payments sector. They emphasized that it would signal to the outside world that necessary business reforms are driven by shadowy interests, rather than what is beneficial for industries and consumers.
