Kyrgyzstan’s central bank has issued draft crypto regulations that will create a legal framework for the country’s crypto industry. The move forms the latest effort by the government to leverage the growing virtual currency adoption in the country while providing adequate investor protection.
Kyrgyzstan’s Crypto Regulations
The National Bank of the Kyrgyz Republic has announced the drafting of two bills concerning crypto regulations in the country. According to a statement by the central bank, the two bills are titled: “On Amendments to Legislative Acts in the Field of Crypto-assets” and “On the Processing of Crypto-assets.”
As previously reported the central bank had been working on the draft laws back in Nov. 2020. At the time, reports indicated that the regulations would usher in a more clear-cut legal framework for crypto commerce in the country.
As part of the two bills, crypto exchanges will receive legal recognition in the country and must therefore comply with anti-money laundering (AML) laws. Exchange operators will have to obtain operating licenses from the central bank to do business in Kyrgyzstan.
The draft regulatory proposal also includes provisions for investor protection as well as a pathway for instituting enforcement actions against bad actors in the industry. If passed, the proposed laws will also cryptocurrencies classified as objects of civil rights.
In keeping with other crypto regulatory standards, Kyrgyzstan’s draft law also covers cryptocurrency taxation. As part of the two bills, services provided by cryptocurrency exchanges will attract a tax burden.
Kyrgyzstan’s Government Focusing on Crypto and Blockchain
The central bank introducing plans for crypto regulations in Kyrgyzstan is the latest in a series of recent developments aimed at supporting the industry. These developments could contribute to improving the crypto scene in the country that has suffered under government inaction.
In Aug. 2019, the government introduced levied taxes on cryptocurrency miners. However, in Sept. 2019 electricity providers cut off supply to mining farms accusing miners of consuming too much electricity.
The government attempted to introduce the crypto miner tax back in the Summer of 2020. At the time, proponents of the plan argued that the move would help raise much-needed revenue for the country especially amid the economic slowdown occasioned by the coronavirus pandemic.
However, the country’s parliament voted against the planned tax regime stating that industrial-level crypto mining would have a detrimental impact on Kyrgyzstan’s energy needs.