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Kyrgyzstan is on track to bring a comprehensive regulation to the digital currency ecosystem through the legal frameworks upon which trading platforms are meant to function. As reported by local news platform 24Kg, the State Service for Regulation and Supervision of the Financial Market has prepared a corresponding draft regulation that is billed to govern exchanges operating in the country.
Per the report, the draft highlights what the basis for government’s intervention in the crypto exchange market will be. Additionally, the regulations will state the legal framework for the circulation of digital assets on Kyrgyzstan soil.
“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 ministry said. “Regulation of the activities of crypto-exchanges will be carried out on the basis of a functional approach by the authorized body in the field of regulation and supervision of the financial market.”
Amongst the many aspects the regulation is billed to cover includes the status, functions, rights and obligations of the crypto-exchanges. Additionally, the “mandatory requirements for the activities of the crypto-exchange, the procedure for their state registration in the Unified State Register” will also be specified.
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Broad Regulations Sweeping the Crypto Ecosystem
The digital currency ecosystem has had its many challenges as it relates to the need for regulation around the world. Originally, cryptocurrencies pose a threat to financial systems as the innovation evolves at a very fast pace such that existing payment systems may be toppled soon. Of a more serious concern is the pseudo anonymous nature of digital transactions and the tendencies for cryptocurrencies to be used in illicit transactions.
Market and financial regulators are making it mandatory for digital currency service providers to integrate Know Your Customer (KYC), and Anti Money Laundering (AML) tools to help curb most of these core threats. Exchanges have had major brawls with regulators over this, and South Korean watchdogs have issued a September 24 deadline to shut down exchanges that will not meet its registration requirements.
The move by Kyrgyzstan is forward thinking as defining a clear regulatory path is crucial in determining how easy compliance will be. With many world citizens seeking to gain exposure to the crypto ecosystem, Kyrgyzstan citizens and residents are bound to see the evolution of the cryptocurrency ecosystem through government designed regulations in the coming months.
