As cryptocurrencies grow in popularity in Kyrgyzstan, the country’s central bank has warned citizens about the risks associated with digital assets. Monetary authorities also warned that crypto payments are illegal in the Kyrgyz Republic.
Kyrgyzstan’s National Bank urges caution with cryptocurrencies
Cryptocurrencies and other virtual assets are becoming increasingly widespread in Kyrgyzstan, the country’s central bank recently noted. Regulators reminded that it is still against the law to use them to buy and sell goods and services, and that the Kyrgyz Som remains the country’s only legal tender.
As quoted by local media, financial authorities also issued a warning about the risks associated with decentralized digital currencies.” No one, as a rule, is responsible for cryptocurrencies. Cryptocurrencies have no financial backing. They have no real value because they are not tied to currencies or other assets.”
This creates a high risk of exchange rate fluctuations and loss of value, the Kyrgyz National Bank (NBK) elaborated. It also noted the risks of settling payments in cryptocurrencies due to the characteristics of cryptocurrencies and the absence of a “controlling central authority. “The NBK further stated.
Therefore, we recommend that the public be cautious and not use cryptocurrencies for payments and settlements. When using cryptocurrencies and virtual assets to make payments, users assume all possible risks and negative consequences.
The authorities’ statement came after the central bank of neighboring Kazakhstan announced last week that it was investigating the crypto market, stressing that it was premature to talk about legalizing cryptocurrencies like bitcoin.
Central Asia, where both countries are located, attracted crypto business, especially miners, last year after China began cracking down on the industry in May 2021. Both countries have since tried to limit mining by shutting down illegal crypto farms and raising electricity rates for licensed mining companies. Miners have been blamed for power shortages and damage to the power grid.
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