Kyrgyzstan to license digital currency exchanges to protect investors

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Kyrgyzstan wants to formally regulate its digital currency industry, starting off with a licensing regime for exchanges. The country’s central bank revealed recently that it believes the move will protect investors from scammers and uphold market integrity.

The National Bank of the Kyrgyz Republic announced the move recently, as local business news outlet Tazabek reports. With the new regime, it believes it will be able to offer investors the same protection they enjoy when dealing in the foreign exchange market. Forex platforms are all licensed by the bank. This gives investors the confidence that their money isn’t at risk.

“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,” NBRK chair Tolkunbek Abdygulov said.

He added, “Today you sell soms, 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.”

Even when it finally introduces the licenses, it still wants investors to be careful when investing in digital currencies. As with many other central banks, it warned about the constant price volatility. Abdygulov reminded investors that as much as they’ll rejoice when BTC hits $50,000, they should also be ready to shoulder the losses when it crashes to half that price.

The NBRK has been working on digital currency regulations for over a month now. As CoinGeek reported, the watchdog announced last month that it was working on two draft bills for the industry. It called on stakeholders to share their thoughts before February 21 when the window closes.

The legislations will officially recognize digital currency exchanges while requiring anti-money laundering and counter-terrorism financing procedures. Exchanges will have to start paying their taxes. The laws will also define digital assets as objects of civil rights.

The NBRK has long stated its objective is to “create favorable conditions for the development of new technologies in the market, minimize the relevant risks, and protect consumer rights.”

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers