Kyrgyzstan’s central bank has completed the drafting of two bills designed to recognize and regulate the country’s emerging crypto sector.
According to an official announcement, the National Bank of the Kyrgyz Republic has opened up the two bills, "On the Processing of Cryptocurrencies" and "On amendments to legislative acts in the field of virtual assets," to public discussion.
Interested parties have until Feb. 21 to submit their comments and concerns regarding the legislation.
The proposed legislation seeks to recognize cryptocurrency exchanges, outlining that exchanges must be operated by legal entities licensed with the country’s central bank. The bill contains reporting requirements aimed at reducing money laundering and terrorist financing risks.
There are also protections for consumer rights, and provisions for enforcement action against fraudsters operating with virtual currencies.
A separate bill introduces the concept of “virtual assets” into the Kyrgyz Republic’s civil code, identifying crypto assets as an object of civil rights. The bill also mandates the taxation of services provided by cryptocurrency exchanges.
The Kyrgyz central bank announced it would begin working on draft cryptocurrency regulations on Nov. 13, citing surging domestic interest in crypto assets as the catalyst.
The Kyrgyz Republic has previously sought to introduce crypto regulation, introducing a tax regime for miners during August 2019. However, authorities then cut off the industry’s access to electricity the following month claiming overconsumption.
Kyrgyzstan’s parliament again considered a tax regime for mining in June 2020, with the government seeking new revenue streams to offset the economic impact of the coronavirus pandemic.
However, the bill was not passed, with lawmakers expressing concerns regarding the impact of industrial mining operations on the country’s energy supply, and the persistence of illegal mining operations despite the September 2019 crack-down.