Kyrgyzstan is attempting to regulate cryptocurrency exchanges. The country’s Finance Ministry has created draft regulations for the sector, encouraging innovation and growing a digital economy.
According to local news outlet 24.kg, Kyrgyzstan’s cabinet is concerned about digital currency exchanges. As a result, the State Service for Financial Market Regulation and Supervision (Gosfinnadzor) has prepared draft regulations to govern the sector. The agency, which reports to the Ministry of Finance, believes that the regulations will encourage innovation and help the Asian country advance its digital economy.
“This will reduce risks and assist in the development of innovative technologies and the formation of a digital economy, as well as lay the foundation for the development of the systemic market and create the preconditions for participation for a wider range of participants, including qualified investors and business,”the agency said.
According to Gosfinnadzor, these regulations will benefit the market by attracting more institutional investors. Furthermore, the government stands to benefit, with the Finance Ministry predicting that legitimate digital currency businesses could contribute significantly to the government’s coffers.
The Ministry stated that the authorized body in charge of financial market regulation and supervision would regulate the activities of crypto exchanges using a functional approach.
The Ministry defines digital currency exchange status, rights, functions, and obligations in its draft regulation. It also specifies the requirements that these exchanges must meet to be licensed.
The draft regulations also establish the mandatory requirements for exchanges in terms of anti-money laundering and counter-terrorist financing. This is becoming increasingly important to regulators, as exchanges lax on these requirements are now being pursued globally. For example, BitMEX made headlines when US authorities began investigating it, culminating in a $100 million settlement. Binance is also on the radar of a dozen regulators, and it is playing catch-up on all the regulations it has ignored for years.