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In recent years, the Kyrgyz Republic has been consistently developing a legal framework for the regulation of virtual asset circulation. Unlike many jurisdictions in the region, Kyrgyzstan has opted not for prohibitions, but for the institutionalization of the crypto market, the introduction of licensing and state supervision, and the integration of digital assets into the existing financial system.
This overview reflects the current state of crypto regulation in the Kyrgyz Republic and may be useful for investors, fintech projects, crypto platforms, and financial institutions considering Kyrgyzstan as a jurisdiction for conducting business.
Evolution of Legal Regulation of Virtual Assets
Period prior to 2022
Before the adoption of specialized legislation, virtual assets existed in a legal “ gray zone. ” Their circulation was not expressly prohibited; however, it was not regulated by specific legal provisions either. In practice, general provisions of civil, tax, banking, and currency legislation were applied. At the same time, there was no formally established legal status of virtual assets, no requirements for crypto exchanges and exchange platforms, no licensing regime, and no systematic state supervision.
Period After 2022 - Establishment of a Special Legal Regime
The situation fundamentally changed following the adoption of the Law of the Kyrgyz Republic “On Virtual Assets, ” as well as Resolution No. 514 of the Cabinet of Ministers of the Kyrgyz Republic dated September 16, 2022 (hereinafter – the “Law ”).
The said Resolution approved key subordinate regulations governing:
- the activities of virtual asset trading operators (crypto exchanges);
- the procedure for issuance and circulation of virtual assets;
- the activities of virtual asset exchange operators (crypto exchange offices);
- the maintenance of state registers of licensed entities.
Thus, Kyrgyzstan implemented a model of mandatory licensing of virtual asset service providers.
Key Definitions and Categories
The legislation of the Kyrgyz Republic introduces detailed terminology that is of fundamental importance for law enforcement.
- Virtual Asset
Pursuant to Clause 2, Article 4 of the Law, a virtual asset is defined as “ a set of data in electronic-digital form that has value and represents a digital expression of value and/or a means of certifying property or non-property rights. ”
At the same time, a virtual asset:
- is not a monetary unit;
- is not recognized as a means of payment;
- does not qualify as a security.
- Crypto Exchange
The Law defines a virtual asset trading operator (crypto exchange) as “ a virtual asset service provider that provides an electronic platform and services directly facilitating the conclusion of transactions with virtual assets. ”
- Crypto Exchange Office
A virtual asset exchange operator is defined as “ a service provider engaged in the purchase, sale, and/or exchange of virtual assets in its own name. ”
- Stablecoins
A separate category is formed by stablecoins, the procedure for issuance and regulation of which is assigned to the competence of the President of the Kyrgyz Republic.
Article 4 of the Law also provides a definition of a stablecoin, which is “ a type of collateralized virtual asset intended to maintain a stable value in relation to monetary funds (fiat currency) and/or underlying assets, expressed in the national currency of the Kyrgyz Republic or in foreign currency. ”
The procedure for issuance (minting), collateralization, ratio of stablecoins to monetary funds (fiat currency) and/or underlying assets, circulation, and regulation of stablecoins shall be determined by the President of the Kyrgyz Republic.
- Digital Token
Under the Law, a digital token is defined as “ a type of virtual asset serving as a means of certifying property and/or non-property rights, including claim rights to other objects of civil rights. ”
- Token Backed by a Real Asset (RWA Token)
The Law also establishes the concept of a real world asset token (Real World Asset Token – RWA Token), defined as “ a virtual asset, the issuance (minting) of which is secured by a property right to a real asset or which represents a digital form of a documented obligation associated with such asset. ”
The list of real assets, as well as the procedure for issuance (minting), collateralization, circulation, and regulation of RWA Tokens, shall be determined by the President of the Kyrgyz Republic.
Licensing and Regulatory Requirements
The right to carry out activities as a virtual asset service provider arises exclusively from the moment a license is obtained.
Pursuant to Article 29 of the Law, in order to obtain a license, a legal entity must, inter alia, ensure the existence of a functioning IT platform hosted on servers located within the territory of the Kyrgyz Republic; disclose information on directors, founders, and beneficial owners; have a business plan, internal policies and procedures; implement KYC/AML systems, internal control, and cybersecurity measures; establish the minimum amount of authorized capital; and pay the state fee.
It should be noted that the license is granted for an indefinite period, is valid throughout the entire territory of the Kyrgyz Republic, is personal (nontransferable), and may not be assigned to third parties. Carrying out activities without a license is expressly prohibited.
Organizational Structure of a Crypto Exchange
Issues related to the organizational structure of crypto exchanges are regulated by the applicable regulatory acts.
The legislation provides for the mandatory establishment of functional divisions, including listing (issuance of virtual assets and stablecoins), trading, information technology and security, clearing and customer identification (KYC), and internal control (compliance control).
This approach aligns crypto exchanges, in terms of regulatory requirements, with traditional financial institutions.
Status of the Virtual Asset Market in Kyrgyzstan
The Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic maintains official registers, according to which as of February 12, 2026:
- 201 virtual asset exchange operators (crypto exchange offices) are registered;
- 13 virtual asset trading operators (crypto exchanges) are operating.
At the same time, there is a steady trend toward the integration of crypto services into the banking sector. A number of commercial banks already provide clients with the opportunity to acquire and use digital assets through mobile applications.
The market is characterized by a combination of licensed crypto platforms, fintech projects, and traditional financial institutions.
Digital Som as an Element of the State Digital Strategy
Pursuant to Resolution No. 2022-P-14/32-3-(PS) of the Board of the National Bank of the Kyrgyz Republic dated May 25, 2022 approving the Concept of the Digital Som, the digital som is considered one of the forms of the national currency, alongside cash and non-cash som.
Key characteristics of the digital som:
- it constitutes a liability of the National Bank;
- it is stored in digital wallets on the digital som platform;
- it is not recorded on the balance sheets of commercial banks;
- access to wallets is provided through commercial bank applications.
A two-tier retail model is envisaged, under which the National Bank interacts with commercial banks, and banks interact with end users.
According to preliminary information, the launch of the digital som is planned for 2027.
State-Backed Stablecoin
A distinctive feature of the Kyrgyz stablecoin model is state participation in the issuance of a national stablecoin.
Currently, there are two types of stablecoins:
- USDKG – backed by physical gold, equivalent to one U.S. dollar, issued in the amount of 50,000,000 tokens, and circulating on the Tron network.
- KGST – pegged to the Kyrgyz som at a 1:1 ratio and listed on the HTX cryptocurrency exchange. In addition, the token is issued on the BNB Smart Chain network under the BEP-20 standard.
These projects represent a rare example of a state-backed stablecoin in Central Asia.
USDKG is issued by OJSC “Issuer of Virtual Assets, ” a company with 100% state participation, founded by the Ministry of Finance of the Kyrgyz Republic.
The issuer of the KGST stablecoin is LLC “KGSTOKEN."
Crypto Banks: Development of Practice in the Absence of Special Regulation
By Order No. 545-r of the Cabinet of Ministers of the Kyrgyz Republic dated September 13, 2024, the Action Plan (Roadmap) for the Development of the Capital Market of the Kyrgyz Republic for 2024–2027 was approved, which declared the intention to establish a crypto bank and develop the corresponding regulatory framework.
At the same time, the current legislation does not contain a definition of a crypto bank, no special licensing regime for crypto banks has been established, and requirements are applied by analogy with virtual asset operators and banking regulation.
Additional opportunities for the establishment of crypto banks and crypto financial institutions are provided within the framework of the special financial investment territory “Tamchy. ”
Authorized Capital Requirements
The legislation establishes high capital thresholds aimed at reducing regulatory and compliance risks:
- for crypto exchange offices – not less than KGS 40,000,000;
- for crypto exchanges – KGS 10,000,000,000.
The authorized capital must be fully paid, formed exclusively from the founders ' own funds, and contributed in the national currency of the Kyrgyz Republic in non-cash form.
The use of borrowed or attracted funds is not permitted.
Taking the above into account, it can be stated that the Kyrgyz Republic is consistently forming a regulated and institutionally structured model of the virtual asset market. Licensing, state supervision, participation of the banking sector, the launch of the digital som, and the issuance of a state-backed stablecoin demonstrate the long-term strategy of the state in the field of digital finance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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