Kyrgyzstan's central bank developing draft law for cryptocurrency industry

The central bank for the Central Asian country of Kyrgyzstan is working on a draft law to regulate the cryptocurrency industry in the country.

According to an announcement on Nov. 13, the National Bank of the Kyrgyz Republic is developing a draft law that would regulate cryptocurrency exchanges in consultation with industry stakeholders.

The bank stated that the draft law would regulate the sale and purchase of cryptocurrencies with the aim of tackling fraudulent cryptocurrency schemes and financial crimes, as well as safeguarding consumer and investor rights.

Among the expected benefits of the forthcoming regulations, the bank notes the improved development of digital financial products, favorable conditions for the business community and even the possible introduction of a formal tax regime for digital assets.

However, the bank also expects crypto legislation to come with its own share of obstacles, stating that the cross-border nature of many private cryptocurrencies will make the law difficult to enforce without the proper infrastructure for monitoring and implementation.

Indeed, the bank states that due to the "lack of regulation and the chaotic nature of the cryptocurrency market," there is no hard data on the number of businesses that would be subject to the new law. 

Per the announcement, the bank expects explicit crypto regulations to provide more certainty for crypto-related businesses and attract investment without a significant effect on the government budget.

The bank will accept proposals for the draft law until Nov. 27, after which they will be published on the official register by Dec. 4.

Solid crypto regulations would be a long time coming for the politically beleaguered nation. In August 2019 the parliament introduced a bill to tax cryptocurrency miners, only for authorities to cut off electricity to the industry a month later due to reported overconsumption. 

Last summer, the parliament was still deliberating on a tax regime for cryptocurrency miners, but civil unrest has since derailed previous political initiatives, with a rump parliament electing nationalist opposition leader and former member of parliament Sadyr Japarov as acting president and prime minister on Oct. 7.