Key Takeaways
- Kyrgyzstan introduced a new law establishing a national cryptocurrency reserve and state-managed crypto mining.
- Under the bill, the law allows issuance of fully asset-backed stablecoins and real-world asset tokens, including in foreign currencies.
- Regulatory oversight will shift to a new authority appointed by the president.
- A regulatory sandbox and investor protections aim to foster innovation and reduce market risks.
Kyrgyzstan’s parliament passed a bill amending the country’s law on virtual assets on Tuesday, laying the groundwork for the creation of a state cryptocurrency reserve, government-led crypto mining, and broader regulatory changes aimed at improving transparency and investor protection in the sector.
The legislation, introduced by Minister of Economy and Commerce Bakyt Sydykov on behalf of the Cabinet, was adopted in all three required readings during a parliamentary session. It redefines the government’s role in the digital economy by moving oversight of virtual assets from the Financial Market Regulation and Supervision Service to a new authority appointed by the president.
According to the bill, the new agency will be responsible for developing and implementing state policy, licensing, and regulatory procedures for virtual asset service providers, in an attempt to improve regulatory efficiency and ensure more centralized control over the sector.
The law introduces the concepts of “state mining” and a “national cryptocurrency reserve”, positioning the government not only as a regulator but also as an active participant in the virtual asset space. These provisions are reportedly intended to reflect the country’s long-term digital strategy and increase state influence in the development of financial technologies.
The amendments also create a legal framework for the issuance and circulation of stablecoins and tokens backed by real-world assets, often referred to as RWA tokens. These digital instruments would be permitted under Kyrgyz law provided they are fully collateralized, including those denominated in foreign currencies.
Furthermore, The bill seeks to foster innovation by introducing a regulatory sandbox mechanism that allows new digital asset products and services to be tested in a controlled environment before broader deployment. At the same time, it emphasizes investor protection through safeguards that limit market activity to fully asset-backed instruments, aiming to reduce exposure to fraud and high-risk speculation.
Central Asia Gradually Embraces Crypto Through State-Led Strategies
Across Central Asia, governments are increasingly turning to digital assets as part of their economic modernization strategies. Kazakhstan has emerged as a regional frontrunner, with President Kassym-Jomart Tokayev proposing a national crypto reserve fund and piloting stablecoin payments for public services.
Similarly, Uzbekistan has developed a structured legal framework for licensed crypto exchanges and asset tokenization, processing over $1 billion in regulated transactions to date. Kyrgyzstan, with its newly passed law, is aligning itself with this regional momentum.
This shift reflects a broader trend of state-led digital finance experimentation in the region, blending control with incremental openness to innovation.
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