The National Bank of Kyrgyzstan has published a draft law that legally defines the cryptocurrency and its use in the Central Asian nation.
With the proposed law, the central bank is responding to the call of the Financial Action Task Force (FATF) to regulate cryptocurrencies and prevent associated risks related to money laundering and terrorist financing Explanations.
Given the increasing interest of Kyrgyz citizens in cryptocurrencies and the increasing spread of the technology in electronic commerce worldwide, it is important to mitigate the risks associated with crypto, wrote the National Bank.
The regulatory authority announced the draft law on December 31, 2020 and published a Package of designs Details of why the new bill is needed and how it fits into Kyrgyzstan’s existing regime.
In one draftCryptocurrency is defined as a digital good that represents value, is stored and used electronically and is neither legal tender nor a document that represents property rights. However, virtual assets are a different type of asset and can represent property rights. another draft says without going into detail.
Under the proposal, the property rights of cryptocurrency holders would be protected by the courts. Businesses and sole proprietorships that are not registered crypto operators or miners should not accept crypto as a means of payment for goods or services, or in the form of investments or savings. Companies would not be able to offer crypto brokerage or issue securities based on cryptocurrencies.
In turn, crypto exchanges must register with the National Bank and be licensed by the latter and keep records of the transactions they facilitate – data that must be made available to the National Bank on request. In the event of an “emergency”, the regulator can require the exchanges to take specific “risk mitigation” measures.
The taxation of companies related to crypto should be done in the same way as the foreign exchange brokers, the National Bank wrote.
The regulator also says that participants in the cryptocurrency market must conduct crypto transactions “in good faith and at your own risk” in order to learn how the cryptocurrencies of their choice work and comply with Kyrgyz law.
The regulator also underlines that it bears no responsibility for the situation where cryptocurrencies are depreciating and will not compensate for such losses for crypto investors.
The draft laws still have to be submitted to the Kyrgyz parliament for discussion.