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Alatau City Cryptocity Concept Discussed at Digital Kazakhstan
The Alatau City project provides for building CryptoCity. The next-generation city will become the platform for the country's first legal crypto transactions. This is a large-scale national project that Kazakhstan has been implementing for several years.
This article by Fintech & AI Center CEO Dias Savetkanov and Deputy Head of Board of Trustees Arman Assakayev, is based on the findings of “The Alatau City Cryptocity Concept” study conducted by the Fintech & AI Center. This project received wide coverage at the International PLUS-Forum “Digital Kazakhstan” held in Almaty on November 26.
Pictured: Dias Savetkanov
CryptoCity is a pilot zone for crypto payments and digital assets under state control.
Key features to be implemented as part of the project:
• Permission to use cryptocurrencies and stablecoins to pay for goods and services.
• Implementation of asset tokenization technologies.
• Development of DeFi and Web3 — next-generation decentralized finance and web technologies.
• Use of AI and machine learning to regulate and implement smart technologies in the urban ecosystem.
As part of the Alatau City project, the cryptocity infrastructure will be developed to form a new hub for the digital economy. “Alatau will become our new center of business activity and innovation,” noted President of the Republic of Kazakhstan Kassym-Jomart K. Tokayev.
International Transport and Logistics Hub
The concept of the new city of Alatau is an international transport and logistics hub based on the current infrastructure and ongoing projects in the Almaty region. Alatau is located along the A3 highway (Almaty – Ust-Kamenogorsk) between the cities of Almaty and Konayev, making it a link in the transport chain leading to a key border hub—the International Center for Border Cooperation (ICBC) “Khorgos”. The 293 km distance from Alatau to Altynkol (Khorgos) stationallows the city to serve as an intermediate logistics hub for freight traffic between China and Kazakhstan.
The Alatau Special Economic Zone (SEZ) of a total area of 97,930.98 hectares is established in the city of Alatau. The SEZ is categorized as a port zone and includes the cities of Konayev, Alatau, and the Talgar district. Free customs zone procedures effective within the SEZ or part of it mean that goods imported into the SEZ under such customs procedure are considered staying beyond the customs territory of the Eurasian Economic Union (EAEU) for the purposes of customs duties, taxes, and non-tariff regulation. SEZ participants can also enjoy a 0% rate on import customs duties. Goods, raw materials, construction materials, and equipment imported into the SEZ are exempt from VAT and customs duties.
The Alatau International Airport is planned to be built at a landfill near the village of Zhanaarna, on the western boundary of the new city.
Innovation Cluster
President Tokayev positions Alatau as the first fully digital city in Central Asia. This means that all aspects of urban life must be integrated into a single digital ecosystem.
5G and IoT technologies will form the basis for the smart city. 5G provides fast and reliable connectivity for all elements of the urban environment integrated into the smart city concept. The rollout of IoT devices, sensors, and transmitters throughout the city will allow monitoring of all aspects of urban life and enable the implementation of M2M communications solutions.
The city's IoT infrastructure will be integrated with the blockchain to create autonomous micropayment systems. Within this model, IoT devices facilitate automatic microtransactions between municipal services users and the infrastructure without the involvement of intermediaries.
CryptoCity
The CryptoCity project, a pilot zone for crypto payments, will also be implemented to become the first one in the Alatau region. CryptoCity is positioned as a regulatory sandbox that allows transactions with digital assets under state supervision.
According to the Decree “On Certain Issues Related to the Development of Alatau City”, the constitutional law must provide for the following areas of special regulation of digital assets:
• specifics of regulating the digital assets circulation and implementing digital financial services based on them, including the options of payments for goods, work, and services using crypto-fiat rails and regulated stablecoins;
• specifics of regulating the application of tokenization technology;
• the functioning of decentralized finance (DeFi) and internet technologies (Web3);
• specifics of regulating the use of artificial intelligence and machine learning technologies.
Pictured: Arman Assakaev
International Practices
A cryptocity is an urban space featuring progressive regulation of cryptocurrencies and blockchain technologies, where these technologies are widely integrated into the economy, everyday life, and governance.
Over the past decade, various countries have unveiled cryptocity projects varying in scope and origins. Most of them were often initiated by crypto enthusiasts and private companies, while national projects are present as well. Currently, all these cities are knit together by common challenges of implementing high-profile projects after their announcements. Therefore, the Alatau cryptocity could become not only the first project of this kind in Central Asia, but also the first implemented cryptocity project.
What lessons can be learned from the Alatau project?
The cryptocity in Kazakhstan is based on studies of similar projects worldwide, including:
• Bitcoin City – an ambitious smart city project announced by El Salvador President Nayib Bukele in 2021;
• Akon City in West Africa;
• Satoshi Island, a project initiated by entrepreneurs and blockchain experts, is an international platform for cryptocurrency professionals and enthusiasts;
• Prospera, an experimental “charter city” and special economic zone on the Caribbean island of Roatan in Honduras;
• And many more.
Real-life examples of crypto city projects allow us to draw several conclusions:
1. Critical dependence of the projects on cryptocurrencies. In the abovementioned cities, the cryptocurrency component was not just a tool, but the fundamental basis of the concepts and the main proposition that the founders “we selling” to governments and investors.
2. Speculative nature of financing. The projects demonstrated a dangerous dependence on investments in crypto assets. In particular, Bitcoin City planned to invest half of the bond proceeds in Bitcoin in expectation of its growth, which turned urban planning into crypto speculation.
3. Shaky legal framework. Progressive cryptocurrency laws have become a key prerequisite for the creation of cryptocity projects. For example, the Bitcoin Law for Bitcoin City.
4. Lack of a long-term vision when creating progressive laws. Many governments acted under the influence of populists in power or on the spur of the moment (the cryptocurrency mania of 2021), having no clear long-term strategy. As a result, progressive laws were quickly amended to become more stringent.
5. Conflicts with national and international institutions. The example of El Salvador and the IMF shows how national cryptocurrency initiatives can conflict with the requirements of international financial institutions, which also creates risks for projects. Meanwhile, the example of Honduras demonstrates how autonomous cryptocities can come into conflict with local populations and the state itself.
Global crypto-city practices demonstrate systemic problems with the concept: excessive reliance on volatile crypto assets and critical vulnerability to legislative changes. None of the projects reviewed achieved their stated goals, highlighting the need for a more balanced approach, where crypto technologies serve as a tool rather than a foundation for urban development.
Cybersecurity
It is planned to utilize cutting-edge security technologies. Traditional cybersecurity approaches with centralized servers and perimeter protection will be taken.
Below is a number of proposed measures and examples of how they could be implemented in practice.
National cryptographic certificates and encryption standards are used. Digital identification is linked to the ID system. Cyberattacks are investigated by government agencies.
In the city's cultural sphere, a centralized NFT platform is being created to register creators' rights to their works. Digital objects are cataloged on a centralized blockchain. The city is implementing basic blockchain elements for copyright verification and license tracking.
Cybersecurity is not built on government servers alone, but also on independent (partially decentralized) nodes, which may be owned by the community or external partners. Primary responsibility for verifying the correct operation of the system and the validity of protocols rests with the government. It remains the primary operator, even if some of the infrastructure is distributed.
Public cryptographic algorithms are used, but government security services have a backdoor (closed access) that allows them to obtain information bypassing the general system in emergency or for control purposes.
City of the Future
An analysis of the application of distributed ledger technology, blockchain, Web3, cryptographic protection, and decentralized control, as well as the experience of their use in cryptocity and cryptodistrict projects, offers five metrics and the questions they answer:
• Decentralization and urban management. To what extent can decision-making be decentralized for private companies and the management of urban systems?
• Payment rails. Where and how can cryptocurrencies be used in the city?
• Interaction with the real sector. How will the cryptocity's infrastructure impact reality: investment in real assets and interaction with the Smart City?
• Regulation and government relations. How much autonomy should a cryptocity have as regards determining development policy and regulatory initiatives, and how will participants interact with the government, including receiving public services?
• Culture and security. How can a cryptocity influence cultural life and unlock creative potential? How can decentralized technologies improve the security of a digital city?
Residents pay in their preferred way: via mobile app, in cash, with usual cards, or digital currencies. The system converts payments instantly, and no one notices the difference. Stablecoins are used where they are truly convenient – for large transactions, investments, and settlements between companies.
When entrepreneurs intend to invest in the construction of a residential complex, they buy project tokens through a special centralized platform instead of going through a long chain of documents. A house, a plot of land, an office, a park – everything can be tokenized.
Residents themselves make decisions on non-critical issues (such as park decoration or events to be organized in the district) through digital voting. This fosters engagement and strengthens the connection between the municipality and the people. Key strategic issues remain under the purview of the state, making city management sustainable and predictable.
Advantages of Alatau City
Alatau City can function as a global financial center, rivaling Dubai, Singapore, and Zurich. With its liberal conditions and advanced infrastructure, the city attracts heavy investments, talent, and projects from all over the world.
Foreign investors can acquire a company, real estate, or city stocks online in just a few clicks. Tokenized assets are traded like shares on a stock exchange. Assets are automatically tracked by IoT sensors, with revenues distributed through smart contracts. In the event of changes in token ownership, the company's founder is replaced automatically —there are no bureaucracy or delays. Businesspeople from different countries can seamlessly establish companies, develop projects, and expand them internationally.
The city intensively uses cryptocurrencies and stablecoins. Foreign investors can purchase assets, pay taxes, salaries, and pay for services in cryptocurrency, without the need for conversion. This gives the city a competitive advantage: companies and investors save on fees and payment deadlines, and can instantly transfer funds to other countries.
Digital Infrastructure
Kazakhstan already has a mature e-government system. Currently, 92% of public services are available digitally on the eGov.kz portal, which integrates 157 government information systems. The number of eGov Mobile app users exceeds 11 million
Since 2020, Kazakhstan has been actively implementing blockchain in public services: real estate mortgage agreements are registered onchain, reducing the time length from three days to one. Also in 2020, the Identification Data Exchange Center (IDEC) was launched to facilitate centralized exchange and ID verification for financial market participants, including through integration with government databases.
In 2025, at the Astana Finance Days and Digital Bridge forums, officials from Ministry of Artificial Intelligence and Digital Development announced the proof-of-concept and prototype development phase of a project to build systems for information delivery from government databases for the purpose of RWA tokenization. The Central Depository announced the creation of record-keeping systems for tokenized assets and their owners.
Summary
The official concept of a cryptocity as part of Alatau City is currently under development. According to Zhaslan Madiyev, Deputy Prime minister – minister of Artificial Intelligence and Digital Development of the Republic of Kazakhstan , Alatau City has already prepared all necessary documents for the use of cryptocurrency in its ecosystem. A full-fledged legislative and regulatory framework for the crypto industry is expected to be ready by 2026.
