Key Takeaways:
- Kyrgyzstan’s Parliament has approved a bill that aims to legalize crypto mining activities.
- The country is also looking to establish a crypto reserve, which could be funded by state crypto mining.
- On the other hand, India is resisting a full crypto framework.
Kyrgyzstan has made a major move towards defining its digital asset economy, with legislators passing legislation altering the laws governing virtual asset ownership in the country to represent the notion of a state-sanctioned cryptocurrency holding. The changes were approved by the Jogorku Kenesh, the parliament of Kyrgyzstan, in three readings in one day, highlighting the speed at which the government has been proceeding to legalize its stance towards crypto mining and tokenized assets.
Details On Kyrgyzstan’s Crypto Mining Bill
The Economy and Commerce Minister Bakyt Sydykov put forward the proposal, calling the novel provisions a model of “state crypto reserve” and “state mining.” According to the Minister’s statement, the reserve would be modeled to house the assets obtained by mining operations, issuing of stablecoins and tokenizing real-world assets.
“A crypto reserve would allow the state to accumulate its own assets in cryptographic form through crypto mining, as well as tokenization of real-world assets and issuance of stablecoins backed by fiat currency,” Sydykov told a parliamentary committee earlier in the week.
The bill provides a formal framework on how the government can act within the cryptocurrency industry, such as regulations of the circulation of stable tokens and tokenized commodities. It further states that the state will not have an exception on paying the electricity tariff on mining, apprehensions that the state may get special treatment in an already contentious sector of energy consumption.
“There is a separate tariff for mining in the country, and the state is no exception,” Sydykov said. He explained that power plants like Kambar-Ata-1 or the thermal station in Bishkek will not take their main business to serve mining farms.
If President Sadyr Japarov signs the bills, which only a few days ago he signed a law allowing the creation of a national digital currency, the measures will make Kyrgyzstan the first state in Central Asia to officially introduce a government-regulated crypto accumulation system. The bill’s text describes the proposed reserve as “a set of virtual assets owned by the state and formed through their mining, issuance, tokenization and acquisition.” It also gives power to the president to determine the storage, control and use of these holdings.
The reserve envisioned is not supposed to be based only on such assets as Bitcoin which was trading more than 113000 on Tuesday. Rather, it would be an integration of digital instruments held by the state, which would be an indication of an expansionary approach to diversification.
The legislative impetus in Kyrgyzstan is consistent with actions throughout the region. Kazakhstan President Kassym-Jomart Tokayev has urged authorities to hasten efforts on artificial intelligence and digital assets, such as the potential to establish a sovereign cryptocurrency reserve. The implication of such efforts is a regional move towards state intervention in the digital economy, although regulatory models differ greatly.
India Remains Cautious On Crypto Framework
India, by contrast, is seeking a much more reluctant approach. According to a government document reviewed by Reuters, New Delhi is considering not implementing full regulation of cryptocurrencies, but cited that formal regulation would be tantamount to giving credence to an industry that it considers to be dangerous. The paper reiterates the stand of the Reserve Bank of India that it “would be difficult” to limit the speculative risks by using regulatory measures.
In India, authorities insist that regulation would have the inadvertent effect of legitimizing crypto assets and letting them become systemic in the financial system. The report notes that “regulating cryptocurrencies in India would grant them ‘legitimacy’, and ‘may cause the sector to become systemic.’” Simultaneously, policymakers admit that a complete prohibition of cryptocurrencies would not help to address the issue of peer-to-peer transfer and decentralized exchange activity, which is not controlled by traditional authorities.
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