As part of the testing, operations with virtual assets backed by both national and foreign currencies are now permitted. However, only commercial banks, payment system operators, and payment organizations are allowed to participate in these operations.
The new version of the document clarifies the requirements for innovative products, risk management, and compliance, including necessary measures to prevent money laundering and identify clients. The National Bank Committee now has expanded powers, including the ability to suspend or revoke licenses in case of violations.
The updated rules also outline the conditions for extending the testing (no more than once and for a maximum of 6 months), as well as the procedure for withdrawing from participation before the testing begins and for early termination with a mandatory client protection plan.
Additionally, the National Bank can now initiate a special regulatory regime on its own without a prior request from participants, publishing the conditions, timelines, and list of permitted operations on its official website.
Changes
Amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic
“On the Approval of the Regulation ‘On the Special Regulatory Regime’ dated August 12, 2020, No. 2020-P-12/45-3-(NPA)
Amendments have been made to the resolution concerning the special regulatory regime previously approved:
1) Paragraph 1 now reads as follows:
“1. This Regulation defines the procedure for creating a special regulatory regime for testing and implementing innovative technologies and solutions in the field of banking and payment operations, including operations with virtual assets, all of which must occur in a controlled environment. Furthermore, the Regulation describes the participation procedure and requirements for participants, including initiatives for the implementation of digital technologies and improving financial accessibility.
Participants in the special regulatory regime are subject to the requirements of legislation, taking into account the conditions and specifics defined by this Regulation and the decisions of the Committee. The Committee may engage independent experts to evaluate applications for participation.
Banking operations within the special regime must be ready for testing in real conditions and at the stage of a minimum viable product.
The technologies being implemented must meet a number of criteria, including their novelty and focus on expanding financial accessibility, as well as the absence of legal restrictions on conducting operations.
The special regulatory regime cannot be used as a means to circumvent the legislation of the Kyrgyz Republic.
2) The main tasks of the special regime now include:
- reducing legal uncertainty for participants;
- defining available rules for testing innovative operations;
- accelerating the market entry of new banking services;
- developing regulatory requirements for new relationships arising from the implementation of innovations;
- enhancing the accessibility and customer orientation of banking services.
3) Changes in paragraphs 3, 4-1, and 5 relate to the description of operations with virtual assets and requirements for participants.
4) Paragraph 6 now describes the testing process and includes definitions of those participating in the special regime.
5) Important changes also affect the rules for submitting applications to create a special regulatory regime — now this can only be done by commercial banks and payment organizations.
6) Amendments have been made to the application submission and processing procedures, including the documents that need to be provided.
7) The conditions and timelines for extending the testing, as well as the rules for early withdrawal from participation, have been clarified.
8) New reporting requirements on the results of the testing and rules for initiating the special regime by the National Bank have been established.
9) The section on conducting the special regulatory regime at the initiative of the National Bank now also includes new conditions and requirements for participants.
