Kyrgyzstan to release new crypto draft law
The central bank’s document cited several reasons for the proposed regulations
The National Bank of the Kyrgyz Republic (NBKR), made a move to regulate cryptocurrencies, particularly the activities of entities that would provide services for the purchase and sale of crypto as well as the operations that are within crypto.
The NBKR is currently in the process of asking for feedback and recommendations regarding the proposal from the public.
“The National Bank of the Kyrgyz Republic notifies about the analysis of the regulatory impact and the development of a draft regulatory legal act, as well as the collection of proposals from stakeholders on the regulation of cryptocurrencies”, the document begins.
“It is proposed to regulate the activities of entities providing services for the purchase and sale (exchange) of cryptocurrencies (operations with cryptocurrencies)”.
The goal of the regulations that the central bank proposed is to develop a favourable set of conditions for the development of technologies and the market while they also minimise the relevant risks and protect consumer rights.
The NBKR explained that the proposed regulation was motivated by several factors: the increase of fraudulent schemes within the industry, the lack of a favourable environment for the development of technology and business, the financing of criminal activities, and the protection of the rights of consumers and investors.
At the time of writing, the country does not yet have statistical data on the number of business entities that would formally be subjected to the proposed regulations. The central bank attributes this to the chaotic nature of the crypto market and the lack of regulations in Kyrgyzstan.
The proposed regulations are expected to cover these issues and make sure that there is transparency in crypto turnovers, while it also includes an optimal tax on crypto.
However, the NBKR also acknowledged that the number of mechanisms within their power that they could use to implement these regulations is scarce. It stated that this was due to technological features as well as the cross-border nature of cryptocurrencies.
This feature of cryptocurrency has been a challenge to address for entities around the globe, as even the United States’ Financial Crimes Enforcement Network (FinCEN) noted that from a compliance point of view, it is hard to define “cross border payments” in the world of virtual assets.
The country of Kyrgyzstan views cryptocurrencies as legal commodities. However, this is the first step towards the regulation and the creation of an optimal tax regime for this emerging industry.