Kazakhstan's central bank digital currency passes second phase of testing

The National Bank of Kazakhstan (NBK) has announced the successful completion of the second phase of testing for its central bank digital currency (CBDC). The digital tenge, the national fiat of Kazakhstan, was confirmed as a feasible CBDC following the testing, which took place between January and December 2022.

The first phase of testing for the digital tenge occurred between July and December 2021, during which a prototype was developed to examine the viability of the CBDC concept. The research conducted during this phase, as well as the second phase of testing, confirmed the viability of the digital tenge as a CBDC.

According to the NBK, the digital tenge is expected to increase the availability of financial services and offer new products and services, including the ability to conduct offline transactions. A survey of consumers showed that the majority would use the digital tenge once it is introduced.

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The NBK plans to use the BNB Chain, a blockchain platform developed by Binance, for the deployment of the digital tenge. Binance, the world's largest crypto trading platform, was granted a license to operate as a provider of exchange and custody services for digital assets in Kazakhstan.

The third phase of implementation for the digital tenge will begin in January 2023 and will involve introducing a solution for commercial use. The fourth and final phase, ending in December 2025, will involve inviting more participants and launching additional services.

The authorities in Kazakhstan have also been working to more comprehensively regulate cryptocurrency-related activities. In December 2021, a bill addressing cryptocurrency mining, trading, and taxation was passed by the lower house of parliament. The introduction of the digital tenge and the regulation of cryptocurrency activities demonstrate the country's commitment to modernizing and digitizing its financial sector.

The successful completion of the second phase of testing for the digital tenge is a significant step towards the wider adoption of CBDCs. As more and more countries explore the potential of CBDCs, the digital tenge could serve as a model for other nations looking to launch their own digital currencies. The NBK's efforts to ensure the viability and functionality of the digital tenge will likely pay off in the long run, as the use of CBDCs is expected to become increasingly widespread in the coming years.