The Kyrgyzstan central bank is working on a draft law to regulate the crypto industry in the Central Asian country.

The National Bank of the Kyrgyz Republic is working on the law that would regulate cryptocurrency exchanges in consultation with industry stakeholders, reports Cointelegraph.

The central bank has stated that the law would regulate the sale and purchase of crypto, as well as protecting consumer and investor rights and tackling fraud.

Among the predicted benefits of the upcoming regulations, the Kyrgyzstan central bank includes the enhanced development of digital financial products, positive conditions for the business community and the potential for a formal tax regime for digital currencies.

However, the bank cautioned that due to the "lack of regulation and the chaotic nature of the cryptocurrency market” it is not clear how many businesses would have to comply with the new law.

In addition, according to the bank’s announcement, the bank forecasts crypto regulations to lead to increased certainty for crypto firms and attract investment without a considerable impact on the government budget.

The bank will continue to accept proposals for the draft law until 27 November. Following this date, they will be published on the official register by 4 December.

Back in August 2019, the Ministry of Economy of Kyrgyzstan filed the draft law “On Amending the Tax Code” aiming to implement cryptocurrency mining taxation.

According to a Cointelegraph report at the time, the aim of this tax is “to increase budget revenues and to contribute to the principle of fair taxation in the Kyrgyz Republic”.

However, going back to 2014, there was an outright crypto ban in place in Kyrgyzstan, with the National Bank of the Kyrgyz Republic issuing a statement saying the use of Bitcoin and other cryptocurrencies as payment is illegal under national law.