Digital Tenge in Kazakhstan: What It Is and Why Kazakhs Need It

Digital currency is a logical extension of Kazakhstan’s active digitization of its economy. As a result, in 2021, the National Bank of Kazakhstan launched a pilot project called “Digital Tenge,” developed with the participation of market representatives, experts, and international partners.

The pilot project has a global objective: to test the viability of digital currency (specifically, the digital tenge) in the realities of Kazakhstan.

In 2022, the collaborative platform Digital Tenge Hub was launched, bringing together all parties interested in the experiment. The platform created conditions for communication, experience sharing, and joint exploration of the nuances of implementing digital tenge. At the end of 2022, testing was conducted with real financial market players, including buyers and suppliers. The test results indicated that the application of Kazakhstan's digital national currency poses no risks to the existing monetary policy and does not threaten the country's financial stability. More than 60% of respondents stated they were ready to use digital tenge in their daily lives.

The project continued into 2023. For example, “digital vouchers” were introduced in several schools in Almaty, used in the student meal payment system. Second-tier banks, with the assistance of international payment systems, issued cards linked to digital accounts. Interestingly, these cards became a unique product—the first of their kind globally.

What is Digital Tenge and How Does It Work?

Digital tenge is considered the third form of Kazakhstan’s national currency. Its uniqueness lies in combining the advantages of cash and non-cash transactions. For instance, no internet is required to make payments using digital tenge.

Like other electronic currencies, digital tenge is represented by tokens—a combination of letters and numbers. Tokens, like traditional cash, come in different denominations.

Although digital currency has no physical form, it can still be “seen”: the National Bank staff designed the digital tenge logo. The logo is based on the symbol ₸, which represents “tenge.” The image is rendered in a white and green color scheme.

One of the key advantages of electronic money is its programmability. For example, a user can earmark funds so they can only be used for specific purposes. Suppose a parent wants their child to avoid buying unhealthy sweets. The parent can program a token to allow purchases only in the school cafeteria or for specific items. However, this advanced functionality requires the preparation of special infrastructure and the development of service and goods classifiers.

What Can Digital Tenge Do?

The national digital currency is expected to perform all the same operations as cash or money on a card. In other words, users can open accounts, pay for services or goods, and make transfers. All transactions will be carried out through banking and payment system applications. Users will also be able to make payments using NFC and QR codes.

How Does Digital Tenge Differ from Other Cryptocurrencies?

The national digital currency differs in several ways:

• Issuer: Cryptocurrencies are known for having no issuer; no organization issues them. In contrast, digital tenge has a specific issuer—the National Bank.
• Mining: Digital tenge is not subject to mining, the decentralized process of creating cryptocurrencies. Anyone can participate in mining, while the circulation of digital tenge follows specific rules, monitored by the National Bank.

 Official Status: Digital tenge is positioned as an official payment instrument. Its exchange rate is equal to the national currency in a 1:1 ratio. Therefore, Kazakhstan's electronic currency can be exchanged.

Where and How to Buy Digital Tenge?

Operating with digital currency will not require new payment infrastructure—the existing, well-functioning infrastructure in Kazakhstan will be used. Users will be able to perform transactions with digital tenge through second-tier bank applications. For instance, digital currency can be purchased using funds available on a card or vice versa, converting tenge into non-cash form.

When Will Digital Tenge Be Introduced in Kazakhstan?

The plan is for people to use the electronic national currency and access all its functionality by 2025. The pilot project will end in 2024: by the end of the year, experts will have the data necessary for the full implementation of digital tenge.

Kazakhstan, like many other countries, views electronic currency as the money of the future. One of their key features is the acceleration of settlements. Today, even with non-cash transactions, payments take some time—using digital tenge will eliminate this drawback. This means the country can keep up with the dynamic pace of development in the modern world.

This article has been translated from its original language using neural network-based translation technology.