Kyrgyzstan may soon accord legal status to cryptocurrency exchanges

Kyrgyzstan has been a hot topic within the crypto-community for a while now. From successfully incorporating crypto-tokens for locals to the central bank’s efforts to implement a series of AML, CFT measures that will force local crypto-exchanges to report their activities, the Central Asian country has been very proactive in the space.

Needless to say, it’s in the news once again today.

Clarifying crypto-exchanges’ position

Kyrgyzstan’s State Service for Regulation and Supervision of Financial Markets (Gosfinnadzor) has introduced a new regulatory framework to grant legal status to cryptocurrency exchanges. According to local media reports, the authorities have also put forward a draft provision for regulating crypto-exchanges.

According to the same,

“The draft provision establishes the status, functions, rights, and obligations of the crypto-exchange, as well as mandatory requirements for the activities of the crypto-exchange, the procedure for their state registration in the Unified State Register.”

Moreover, it also demands that crypto-exchange service providers comply with existing AML/CFT measures.

Significance

According to a statement released by the ministry,

“This will reduce risks and assist in the development of innovative technologies and the formation of the digital economy, as well as lay the beginning of the development of the system market and create prerequisites for participation for a wider range of participants, including qualified investors and business.”

Additionally, the new framework is expected to bolster investor awareness of crypto-exchange operations. What’s more, some have also speculated this will generate new income sources for the country’s national budget.

Even otherwise, the Kyrgyz Republic has a competitive level of infrastructure and regulatory clarity for those seeking to get into crypto. For example, not so long ago, the National Bank of the Kyrgyz Republic introduced a licensing regime for cryptocurrency exchanges. This step was taken in an effort to protect local investors.

Having said that, the crypto-sector has come in for its fair share of criticism and opposition, especially over the last few months. For instance, a former government official slammed crypto-mining operations in the region recently, claiming,

“Consumption of electricity due to cryptocurrency mining has increased and this has led to an energy crisis.”

It’s worth pointing out here that this is an opinion many hold, especially crypto-skeptics, despite repeated efforts to prove otherwise.