Kyrgyzstan is seeking to regulate digital currency exchanges. The country’s Finance Ministry has developed draft regulations for the sector, stating that this will foster innovation and lead to the growth of a digital economy.
Kyrgyzstan’s cabinet is concerned about digital currency exchanges, local outlet 24.kg reports. As such, the State Service for Regulation and Supervision of Financial Markets (Gosfinnadzor) has prepared draft regulations to govern the sector. The agency, which is under the Ministry of Finance, believes that the regulations will not only foster innovation but also 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.
Gosfinnadzor believes that the market will benefit from these regulations, including through attracting more institutional investors. In addition, the government stands to benefit as well, with the Finance Ministry predicting that legitimate digital currency businesses could make a significant contribution to the government’s coffers.
“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,” the ministry stated.
In its draft regulation, the Ministry defines the status, rights, functions and obligations of a digital currency exchange. It also outlines the mandatory requirements that these exchanges must fulfill to get licensed.
The draft regulations also establish the mandatory requirements exchanges must adhere to in regards to anti-money laundering and counter-terrorist financing requirements. This is becoming increasingly crucial to regulators, with exchanges that have been lax on these requirements now being pursued all around the world. BitMEX grabbed the headlines when U.S. authorities started going after it, culminating in a $100 million settlement. Binance is also on the radar of a dozen regulators and is playing quick catchup with all the requirements it flouted for years.
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