Kyrgyzstan has taken a significant leap forward in cryptocurrency regulation with its newly approved law on virtual assets. In a fast-tracked legislative process, the Parliament passed the ‘Virtual Assets’ bill through three consecutive readings, marking a pivotal moment in the country’s financial and digital evolution.
Key Highlights of the New Virtual Assets Law
At the core of the legislation is the introduction of a licensing system aimed at creating a safer and more regulated environment for crypto transactions. The law further defines new categories of digital tokens such as stablecoins and Real World Asset (RWA) tokens, catering to the evolving needs of technology-driven markets.
Here are the standout features of the law:
- Implementation of a government-controlled crypto reserve system.
- Establishment of state-run crypto mining initiatives using government resources.
- Clearer regulation and distribution of oversight roles among government entities, ensuring compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
- Introduction of regulatory sandboxes to safely test out new crypto-related technologies and services in controlled environments.
Crypto’s Role in Kyrgyzstan’s Economy
The popularity of cryptocurrencies has been soaring in Kyrgyzstan. According to the country’s Economy and Trade Minister Bakyt Sydykov, crypto exchanges handled transactions worth 1 trillion soms between January and July 2025. Furthermore, the sector contributed 1 billion soms in tax revenues during the same period, underscoring its growing economic significance.
This growth is further supported by the presence of 169 virtual asset exchange operators, 13 crypto exchanges, and 11 industrial-level crypto mining companies currently operating in the nation. As the sector expands, the new law is expected to provide much-needed structure and protection for investors and operators alike.
Addressing International Concerns
Despite its vigorous embrace of digital currencies, Kyrgyzstan has faced criticism and global scrutiny. Recently, UK-imposed sanctions targeted certain Kyrgyz banks and crypto exchanges over alleged links to Russian sanction evasions. In response, President Sadyr Japarov has emphasized that no Kyrgyz bank is involved, restricting the management of Russian rubles to state-owned Keremet Bank. This move highlights Kyrgyzstan’s commitment to safeguarding its economy while aligning with international obligations.
Why This Matters
Kyrgyzstan’s proactive stance in regulating virtual assets sets a precedent for other nations navigating the balance between innovation and accountability. By embracing a robust legal framework, the country is well-positioned to foster sustainable growth in its crypto industry while protecting its financial ecosystem.
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