The National Bank of Kyrgyzstan submitted for public discussion two draft laws “On the turnover of cryptocurrencies” and “On amendments to some legislative acts in the field of virtual assets”.
The new legislation aims to regulate cryptocurrency exchanges. According to the new rules, such sites must be managed by legal entities licensed by the country’s central bank. The draft laws provide reporting requirements to reduce the risks of money laundering and terrorist financing.
The updated provisions provide for consumer protection and enforcement measures to be applied to Virtual Asset Service Providers (VASP). The Central Bank of Kyrgyzstan can take action against VASP in case of fraud with virtual currencies, dubious transactions, as well as for actions or omissions that may pose a threat to the interests of consumers and investors.
The draft law “On the turnover of cryptocurrencies” introduces the concept of “cryptocurrency” into the Civil Code of the Kyrgyz Republic, thereby defining digital assets as an object of civil rights. The bill includes taxation of services provided by cryptocurrency exchanges. The tax regime for the activities of cryptocurrency exchange operators and the procedure for submitting tax reports are determined by the tax legislation of the Kyrgyz Republic. Interested parties can submit their comments regarding these bills by February 21, 2021.
The Central Bank of Kyrgyzstan began developing regulation for trading floors back in November. The regulator stated the need to control such platforms due to the increased interest of citizens of the country in digital assets. In September 2019, the government of the Kyrgyz Republic has already tried to introduce regulation of cryptocurrencies, proposing to introduce taxes on mining, which would increase state budget revenues.
In June 2020, the Kyrgyz parliament again began to consider the introduction of a tax regime for the mining industry. The country’s government was interested in finding new sources of income to offset the effects of the pandemic and the economic crisis. However, the bill was never adopted – the Kyrgyz authorities considered that cryptocurrency mining would have a bad effect on the country’s energy supply and the safety of electrical systems.
