In light of the rising popularity of cryptocurrencies in Kyrgyzstan, the country’s central bank has issued a warning to citizens about the dangers of digital assets. Crypto payments are also illegal in the Kyrgyz Republic, according to the monetary authority.
Cryptocurrencies and other virtual assets are becoming more popular in Kyrgyzstan, according to the country’s central bank. Using them to buy or sell goods and services is still illegal, according to the regulator, with the Kyrgyz som remaining the country’s only legal tender.
The monetary authority also issued a warning about the risks associated with decentralized digital currencies, according to local media. “As a rule, no one is liable for cryptocurrency.” It is not financially supported. It has no real value because it is not linked to any currency or other asset,” the report stated.
This creates high risks of exchange rate volatility and loss of value, the National Bank of Kyrgyzstan (NBK) elaborated. 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:
Therefore, we recommend citizens to be prudent and refrain from using cryptocurrency for payments and settlements. Users assume all possible risks and negative consequences when making settlements using cryptocurrency and virtual assets.
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, where the two countries are situated, attracted crypto businesses last year, especially miners after China started cracking down on the industry in May, 2021. Both nations have since tried to limit mining by shutting down illegal crypto farms and raising electricity rates for authorized mining enterprises. Miners have been blamed for power shortages and damage to the electricity networks.