Amid the growing popularity of cryptocurrencies in Kyrgyzstan, the country’s central bank has reminded citizens about the risks associated with the digital assets. Crypto payments in Kyrgyz Republic are also illegal, according to the monetary authority.
National Bank of Kyrgyzstan urges caution with cryptocurrency
Cryptocurrencies and other virtual assets are increasingly spreading in Kyrgyzstan, the nation’s central bank recently noted. They cannot be used to purchase goods or services, and the Kyrgyzstani som is the sole legal tender.
Local media quoted the warning that the central bank had issued regarding potential risks associated with decentralized digital currencies. “No one, as a rule, is liable for cryptocurrency. It is not supported financially. It has no real value due to the fact that it is not tied to any currency or other asset,” it said.
According to the National Bank of Kyrgyzstan, this poses high risk of loss of value and exchange rate volatility. It also pointed to the risks with settlements in cryptocurrency, stemming from its features and the absence of a “controlling central body.” The NBK further stated:
We recommend that citizens be cautious when using cryptocurrency to settle payments or make payments. Settlements made with cryptocurrency or virtual assets are subject to all risks.
The authority’s statement comes after the central bank of neighboring Kazakhstan announced last week it’s examining the crypto market while emphasizing it’s too early to talk about legalization of cryptocurrencies like bitcoin.
Central Asia is where these two countries are located. It attracted cryptocurrency businesses last year. Particularly miners, after China began cracking down in May 2021. Since then, both countries have attempted to restrict mining by closing down illegal crypto farms as well as raising electricity rates for licensed mining companies. Power shortages have been linked to electricity network damage and mining has been blamed.
What do you think the National Bank of Kyrgyzstan will do in the future to adjust its policy on cryptocurrencies? Please leave your feedback in the comment section.
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