The National Bank of the Kyrgyz Republic (NBKR) plans to issue licenses to virtual asset service providers (VASPs). However, the regulator considers investments in cryptocurrencies risky.
The chairman of the NBKR Tolkunbek Abdygulov said that the central bank intends to regulate transactions with digital assets, and for this it is necessary to create certain conditions. For example, if a user wants to buy bitcoin, they must use a licensed service where they can buy bitcoin for fiat currency. According to Abdygulov, the purchased crypto assets should “be guaranteed to belong to the user”. Therefore, the NBKR plans to grant a license to cryptocurrency exchange operators to ensure the security of client funds.
Abdygulov said that when converting Kyrgyz som into dollars with the help of licensed currency exchange offices, there is no risk of losing money. It should be the same with cryptocurrencies. However, the regulator has not changed its attitude to digital assets and believes that investing in them is risky.
“Citizens are advised to exercise caution. If bitcoin recently reached $48,000, then tomorrow it may collapse to $20. Then all your investments will be burned. These are investments with a high level of risk, ” Abdygulov warned.
He explained that bitcoin was created by private individuals, without the participation of the state. And behind fiat currencies is the government and the economy. Once bitcoin was worth only 6 cents, and today it is already preparing to overcome the $50,000 mark. Analysts give different forecasts about bitcoin, but no one can predict its exact price in the near future. Abdygulov also recalled the draft laws on the turnover of cryptocurrencies submitted for public discussion. During the year, the NBKR will interact with commercial banks and cryptocurrency players to discuss possible options for regulating cryptocurrencies. The Chairman of the NBKR hopes that the work on this issue will be completed by the end of the year.
As for the regulation of cryptocurrency mining, Abdygulov said that questions have already been raised about the electricity consumption of miners. In 2019, the Ministry of Economy of Kyrgyzstan presented a bill that proposed to tax cryptocurrency miners. However, clear regulations have not yet been established for business activities in the field of mining.
It should be noted that the Central Bank of Kyrgyzstan began to develop regulation for cryptocurrency exchanges quite recently-at the end of last year.