Starting in 2022, Kyrgyzstan is actively developing and implementing new laws and projects that regulate blockchain and cryptocurrency technologies, despite the fact that the National Bank of the country urges citizens to be careful with this type of investment.
Also, in August 2022, the Act “On Virtual Assets” entered into force in Kyrgyzstan, which defined clearer rules of the game on the cryptocurrency market, as well as defined the main obligations and requirements for its participants.
The regulation of the crypto market in Kyrgyzstan is carried out by the Agency for the Development of Information Technologies and Communications, which is a state body that oversees and regulates technologies such as blockchain and cryptocurrency.
According to the law, any natural or legal person has the right to conduct activities related to virtual assets, as well as to own, use and dispose of virtual assets, including exchanging them for other types of virtual assets and buying or selling them.
Regulated activity in the field of virtual assets is provided for by this Law:
- It is divided into private and industrial.
- Private mining is carried out by an individual entrepreneur – a resident and (or) non-resident of the Kyrgyz Republic.
- The industrial activity is carried out by a legal entity – a resident and (or) non-resident of the Kyrgyz Republic.
- Issue (release) and initial placement of virtual assets;
- Activities of virtual asset service providers.
A virtual asset service provider within the meaning of the law is a legal entity registered on the territory of the Kyrgyz Republic, which provides one or more types of services related to virtual assets as a business activity on the basis of a license issued in accordance with the procedure established by this Law.
In addition, the government also adopted a number of documents that establish rules for crypto exchanges.
Among the requirements is to conduct its activities as a public company, as well as mandatory registration in the Unified State Register of Crypto Exchanges of the Kyrgyz Republic.
Types of services provided by crypto exchanges:
- purchase and sale (exchange) of virtual assets;
- exchange between virtual assets;
- transfer of virtual assets;
- storage, management, and control of virtual assets;
- provision of financial services related to the initial placement and (or) sale of the issuer’s virtual assets.
Basic licensing requirements for virtual asset providers:
- availability of a functioning Platform located on servers in the territory of the Kyrgyz Republic;
- availability of copies of documents certifying the identity of managers, founders, and beneficial owners of the legal entity;
- availability of a technical and economic justification (business plan), basic policies, rules, and procedures of the provider of virtual assets;
- payment of state tax;
- availability of a system of internal control, technical, informational, and technological measures to protect the provider of virtual assets;
- availability of rules and procedures regulating information security (cyber security) and business continuity, protection of consumer rights, and processing of personal data of the virtual asset service provider;
- availability of the formed minimum size of authorized capital.
License issuance terms
The time required to obtain a crypto license can vary depending on various factors, including the workload of the regulatory body.
The application for the issuance of a license is considered within a period not exceeding one month. As a rule, the whole process can last several months.
Analyzing the legislation and the changes taking place in the country, a favorable situation is emerging in the ecosystem of blockchains and cryptocurrencies – there are miners, cryptocurrency exchangers, blockchain communities, crypto traders, cryptocurrency enthusiasts, WEB3 startups, etc.
Contact the law firm “Prikhodko and Partners” if you need professional support in obtaining a crypto license in Kyrgyzstan.