National Bank of the Kyrgyz Republic and Crypto Exchanges

Kyrgyzstan is the former Soviet Republic that gained independence in 1991. As in the case of its neighboring countries of Uzbekistan, Tajikistan, the country is struggling to cope with financial problems. Tolkunbek Abdygulov who serves as the chairman of the National Bank of the Kyrgyz Republic made an important announcement. According to the announcement, the country’s central bank is planning to start regulating exchange operations involving cryptocurrencies like Bitcoin. Interestingly, the regulatory initiative aims to protect crypto operations in the Kyrgyz Republic. 

Moreover, the initiative aims to provide investor protections similar to those that are already in place for traditional finance. People should keep in mind that, the central bank’s objective is to create conditions for clients, for citizens of the Kyrgyz Republic. For example, anyone can go to an exchange office, to exchanges soms for dollars. If an exchange office has a license from the country’s central bank, there is no risk of losing money. Interestingly, there is an objective to do the same for cryptocurrencies. 

Crypto and the Kyrgyz government

The country’s central bank understands the risk factors as well. In spite of the central bank’s ambitious plan to help the local population safely invest in crypto, the central bank is warning the public about the high risks of crypto investments. 

As a reminder, after introducing a draft crypto bill in November 2020, the Kyrgyz government presented two bills to public discussion in January 2021. Based on the information provided by Abdygulov, Kyrgyz authorities expect to finalize the bills by the end of 2021. 

This is not the end of the story, as Kyrgyzstan also sought to regulate crypto mining activities in the country. Interestingly, the proposed law would tax miners at a flat rate of 15% of profits generated through the sale of mined crypto assets. It is worth mentioning that, the bill “On Amending the Tax Code of the Kyrgyz Republic” was first proposed in August 2019. 

The government should work with the central bank and lawmakers to develop the crypto industry in the country. Moreover, authorities should join forces with crypto companies to make cryptocurrencies more popular across the country. Kyrgyzstan has the potential to attract investors.

However, to reach this result it is important to create a crypto-friendly environment. Moreover, it makes sense to cooperate with neighboring countries to make cryptocurrencies more popular in the region.