The National Bank of the Kyrgyz Republic (NBKR) is planning to license cryptocurrency exchanges in the country amid growing interest in digital assets, as reported by local publication Tazabek. NBKR chairman Tolkunbek Abdygulov has said that a licensing regime will protect their local cryptocurrency investors.
Cryptocurrency Exchanges License Intended for Safeguarding Crypto Operations
Abdygulov has said that a regulatory initiative is intended to safeguard crypto operations in the Kyrgyz Republic to provide investor protections similar to those present in traditional finance:
“The NBKR’s objective is to create conditions for clients, for citizens of the Kyrgyz Republic. If you want to buy Bitcoin you just go to an exchange office, pay money and get those Bitcoins guaranteed. We plan to grant a license to cryptocurrency exchange operators to buy and sell cryptocurrency. There must be a guarantee.”
He explained that imposing licenses would eliminate the fraudulent risk on the part of the cryptocurrency exchanges:
“Today you sell some, buy dollars if an exchange office has a license from the NBKR, there is no risk of losing money. There is an objective to do the same for cryptocurrencies.”
However, Abdygulov is also aware of the risks of cryptocurrencies and warned the public against the volatility and price risks of crypto investments:
“If Bitcoin hit $50K yesterday, it could drop to $20K tomorrow. And, then all your invested money will be burned. This is a very high-risk investment.”
Kyrgyzstan to Finalize Crypto Regulation by 2021 End
Kyrgyzstan is following the steps of various countries that have licensing systems in cryptocurrency exchanges. For instance, countries like Japan and Thailand have mandated the licensing of cryptocurrency exchanges. Even, United Kingdom imposed a regulation on companies dealing with cryptocurrencies to register themselves.
The government of Kyrgyzstan introduced a draft cryptocurrency bill in Nov 2020. Following that, the regulators presented two bills for public discussion in January 2021. The lawmakers of Kyrgyz are expected to finalize the bills by the end of 2021.
Kyrgyzstan has also sought to regulate cryptocurrency mining in the country. However, no associated regulation has been adopted so far.