The Ministry of Economy and Commerce of Kyrgyzstan initiated the adoption of a presidential decree introducing temporary regulation (a pilot project) allowing banks to open and service client virtual asset wallets. The draft decree has been published for public discussion.
According to the ministry, the initiative aims to:
- safely integrate innovative financial instruments into the national financial system;
- enhance transparency and oversight of transactions;
- create a legal and reliable channel for businesses to manage virtual assets;
- stimulate cross-border payments and attract investment into Kyrgyzstan’s economy.
Within the pilot project, participating banks will be authorized to:
- open and service client virtual asset wallets;
- conduct virtual asset operations (buying, selling, exchanging, storing, and transferring);
- provide related financial services within current legislation;
- test the use of virtual assets as a means of payment in foreign trade contracts.
The ministry emphasized that implementation of the project in a controlled environment will allow for testing new services and regulations without creating excessive risks for the financial system, ensuring transaction traceability, and gathering empirical data for future regulatory improvements.
Currently, banks in Kyrgyzstan lack a full legal and technological framework for virtual asset operations, which forces some demand into the unregulated sector.
«International experience (including the U.S., Liechtenstein, and Switzerland) shows that banking services linked to virtual assets can function effectively under strong prudential supervision and anti-money laundering/ counter-terrorist financing (AML/CFT) standards. Neobanks are already operating in a number of countries, providing their users with a bridge between traditional financial services (TradFi) and the crypto economy. Given the development of end-to-end technologies, including blockchain, the adoption of such solutions will only expand,» the background statement says.
Using these trends to the benefit of the Kyrgyz Republic’s economy and population will strengthen the country’s position in the international financial system and create conditions for long-term economic growth.
