Kyrgyzstan Has Blockchain-Friendly Legal System, Report Says

Kyrgyzstan has a legal system that is already friendly to blockchain-related projects and crypto trading, according to a recent report.

The legal ecosystem in the Kyrgyz Republic offers favorable conditions for blockchain development, according to a recent report titled “The Legal Status of Blockchain Technology in Kyrgyzstan.” The report was commissioned by the Kyrgyz Stock Exchange and the International Finance Centre Development Agency and prepared by Geneva-based law firm John Tiner & Partners. The paper focuses on legal aspects related to blockchain technology, cryptocurrency trading, crypto mining, crypto assets, and initial coin offerings (ICOs).

The report notes that the law of Kyrgyzstan does not ban or hamper the development of blockchain-based projects, including cryptocurrency mining and trading. The main things to consider are compliance with the country’s tax code, anti-money laundering rules, consumer and investor protection norms, and several other laws that regulate traditional trade.

Kyrgyzstan’s legislation is unique in the sense that it already allows businesses and individuals to take part in crypto-related trades and projects with global outreach based on the Kyrgyz jurisdiction, the report concludes.

The authors note:

“Without a need for legislative reforms, Kyrgyzstan can now satisfy the demand of global crypto-investors to deal with blockchain-based assets on a firm legal basis. Having said that, we are fully in agreement with the position of the National Bank that non-professional investment of savings into crypto-assets carries an unacceptable risk. The introduction of blockchain technologies can speed up securities settlements, optimize state procurement procedures and make the country a regional centre for securities offerings by startups.”

Valery Tutykhin, head of the International Finance Centre Development Agency, told local news agency that Kyrgyzstan is attractive for foreign investors focused on blockchain-based assets.

“Our local investment market infrastructure can be used to legally invest into any crypto-assets. Does someone want to buy cryptocurrencies? Let him do it through the local commodities exchange, and it will pay local taxes. Does someone want to raise capital for a startup through an initial coin offering (ICO)? Let him do it through the local stock exchange. Its listing rules are not so complex,” he said.

Kyrgyzstan is a member of the economic bloc known as Commonwealth of Independent States (CIS), along with Russia, Kazakhstan, Belarus, and Ukraine, among others.