“Given the rapid development of digital technologies and cryptocurrencies, the creation of a crypto bank is an urgent necessity for the integration of crypto assets into the traditional financial system of the country,” said Kyrgyzstan’s Ministry of Economy and Commerce.
According to a 7 January 2025 Times of Central Asia report, public interest in cryptocurrencies is growing among individuals and businesses in Kyrgyzstan. However, the market remains poorly regulated.
The Ministry believes that a licensed crypto bank will address these challenges, increasing transparency, trust, and financial security.
Read more: This Week In Crypto Asia: Indonesia Crosses $30 Billion In Crypto Transactions In 2024
“A crypto bank will ensure safe, regulated, and convenient interaction of citizens and businesses with cryptocurrencies.”
The integration of digital assets with licensed crypto banks is expected to bridge the gap between traditional banking and decentralized finance (DeFi).
By doing so, Kyrgyzstan seeks to attract foreign investment, foster technological innovation, and provide its citizens with secure and regulated access to cryptocurrencies.
Kyrgyzstan’s approach is unique in its focus on licensed crypto banks, which will operate under strict regulatory frameworks to ensure transparency and security.
The decision to involve licensed crypto banks stems from the need to mitigate risks.
Licensed institutions will adhere to stringent regulations, safeguarding users’ funds and personal data. Furthermore, regulatory oversight will help combat money laundering, fraud, and other illicit activities. By integrating cryptocurrencies into the banking system, Kyrgyzstan hopes to provide underserved populations with access to modern financial services.
Kyrgyzstan Already Taxes Cryptocurrency Mining
With a rate of 10% applied to electricity costs for mining activities, the country already taxes crypto mining, This rate includes VAT and sales tax.
From January to November 2024, Kyrgyzstan collected 46.6 million KGS (approximately $537,000) in cryptocurrency mining taxes, nearly half the total collected in 2023, according to the Ministry of Finance.
Kyrgyzstan's Crypto Mining Tax Revenue Halves to $535K in 2024: In 2024, Kyrgyzstan saw a significant drop in tax revenue from cryptocurrency mining, despite the… https://t.co/TlvfsnLSEi | https://t.co/1PJO4L7EKd | https://t.co/Rcbtt5yU6x #Cryptocurrency #Bitcoin #Ethereum
— CTrend FX – Algorithmic Trading Solutions (@center_forex) January 3, 2025
Notably, Kyrgyzstan’s crypto move comes at a time when countries worldwide are adopting progressive policies to integrate crypto into their economies. For instance:
– El Salvador made Bitcoin legal tender in 2021, aiming to boost financial inclusion.
– The UAE has established itself as a hub for blockchain innovation by creating favorable regulations.
– The European Union recently introduced the Markets in Crypto-Assets (MiCA) regulation to harmonize crypto laws across member states.
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