Kyrgyzstan

**Financial Regulatory Analyst Report: Kyrgyzstan**

**Report Date:** April 12, 2025

**Topic:** Retail_Trading_Status (Cryptocurrency)

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**1. Current Status:** `Allowed-Regulated`

**2. Detailed Narrative Explanation:**

Individual citizens and residents in Kyrgyzstan are legally permitted to buy, sell, hold, and exchange cryptocurrencies (referred to as "virtual assets" in legislation). This status is primarily defined by the **Law "On Virtual Assets"** which came into force in August 2022 [4, 18]. This law marked a significant shift from previous stances where the National Bank primarily issued warnings about risks [6] and regulation focused narrowly on taxing mining activities [4].

The 2022 law explicitly states that individuals and legal entities can possess, use, dispose of, exchange, purchase, and sell virtual assets [4, 3]. However, it is crucial to note that virtual assets are **not recognized as legal tender** in Kyrgyzstan [4, 6, 16]. Their use as a direct means of payment for goods and services within the country is restricted or prohibited [2, 4]. Instead, they are generally treated as commodities or intangible assets [2, 8, 16].

The "Allowed" status is coupled with a distinct regulatory framework, making it "Allowed-Regulated". Key aspects of this regulation include:

*   **Licensing:** Entities providing services related to virtual assets, such as exchanges (trading operators) and exchangers (exchange operators), must obtain a license [3, 4, 12, 15]. These licenses are issued by the Financial Market Regulation and Supervision Service, operating under the Ministry of Economy and Commerce [12, 8]. Operating without a license is prohibited.
*   **AML/CFT Compliance:** Licensed Virtual Asset Service Providers (VASPs) are subject to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CTF) regulations [3, 15, 8]. This includes implementing Know Your Customer (KYC) procedures [8, 19] and adhering to the Financial Action Task Force (FATF) Travel Rule, which requires sharing originator and beneficiary information for transactions exceeding certain thresholds (approx. 85,000 KGS or $1,000 USD) [15].
*   **Restrictions on Unlicensed Platforms:** Significantly, regulations introduced or clarified around January 2025 explicitly prohibit individuals and legal entities residing in Kyrgyzstan from using the services of *unlicensed* virtual asset exchange operators [13]. This measure directly impacts retail users, mandating they use locally licensed platforms for compliance and safety.
*   **Mining Regulation:** Cryptocurrency mining is also regulated; miners must register, meet certain technical requirements, and pay taxes often based on electricity consumption [3, 4, 14].
*   **Recent Regulatory Tightening (Early 2025):** Further regulations have been introduced, including mandatory state registration for virtual asset issuance, requirements for asset backing/collateral (prohibiting unsecured issuance), significantly increased minimum authorized capital for operators, and transparency rules regarding ultimate beneficiaries [13]. Restrictions on anonymous transactions and wallets (like private coins) are also being implemented unless identification procedures are followed [13].
*   **Ongoing Developments:** The government continues to evolve the regulatory landscape, with proposals for establishing licensed "crypto banks" to further integrate digital assets into the traditional financial system in a regulated manner [5, 14].

While the framework allows retail participation, the National Bank of the Kyrgyz Republic maintains a cautious stance, highlighting the volatility and risks associated with cryptocurrencies and stating they are not suitable for inclusion in national reserves currently [4, 10]. The regulatory environment is dynamic and aimed at aligning with international standards (like FATF recommendations), protecting consumers, preventing illicit activities, and fostering a controlled digital asset market [3, 7, 18].

**3. Supporting Excerpts from Sources:**

*   **On Legality for Individuals (CABAR.asia):** "According to the law [On Virtual Assets, 2022], any person or legal entity may carry out activities related to virtual assets, as well as possess, use and dispose of virtual assets, including exchange them to other types of virtual assets, as well as purchase or sell them." [4]
*   **On Non-Legal Tender Status (CABAR.asia):** "However, the virtual asset is not a legal tender in the territory of Kyrgyzstan. In other words, no transactions in cryptocurrency are allowed in the country [as direct payment]." [4] (Note: The second sentence refers to direct payment use, not trading/holding).
*   **On Licensing Requirement (Scorechain):** "Kyrgyzstan requires crypto exchanges and service providers to obtain a license from the State Service for Regulation and Supervision of Financial Markets. This ensures businesses meet stringent anti-money laundering (AML) and counter-terrorist financing (CTF) standards..." [15]
*   **On AML/Travel Rule (Scorechain):** "In line with international practices, Kyrgyzstan enforces the Travel Rule. Virtual Asset Service Providers (VASPs) must share specific details... for transactions exceeding 85,000 KGS (approximately USD 1,000)." [15]
*   **On Prohibition of Using Unlicensed Platforms (Akchabar.kg):** "Individuals and legal entities residing in Kyrgyzstan are now legally prohibited from using the services of unlicensed virtual asset exchange operators. In other words, citizens and companies in the country must only use platforms that have obtained the appropriate license in the Kyrgyz Republic." [13]
*   **On Regulatory Oversight (YB Case):** "Ordinance of cryptic commerce in Kyrgyzstan is administered by sundry pivotal state entities... These entities encompass the National Bank of Kyrgyzstan, the Ministry of Finance, along with particularized overseers... the governmental oversight of cryptocurrencies in Kyrgyzstan encompasses a plethora of entities for scrutinizing the enforcement of statutes in the domain of anti-money laundering (AML) and the execution of the “Identify your consumer” (KYC) stratagem." [8]
*   **On Recent Collateral Rules (Akchabar.kg):** "The issuance of virtual assets without collateral is prohibited. Issuers are required to back their assets with collateral, which may include securities, shares, gold or real estate." [13]

**4. Source URLs:**

*   [2] Wikipedia - Legality of cryptocurrency by country or territory: `https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory` (Provides general status context)
*   [3] TKDeal - Crypto license in Kyrgyzstan: `https://tkdeal.com/crypto-license-in-kyrgyzstan`
*   [4] CABAR.asia - Kyrgyzstan Introduces Regulation of Cryptocurrency Market (Dec 2022): `https://cabar.asia/en/kyrgyzstan-introduces-regulation-of-cryptocurrency-market`
*   [5] 24.KG - Crypto banks to be opened in Kyrgyzstan (Nov 2024): `https://24.kg/english/310812_Crypto_banks_to_be_opened_in_Kyrgyzstan_at_initiative_of_Economy_Ministry/`
*   [6] National Bank of the Kyrgyz Republic - Warning on Virtual Currency (July 2014): `https://www.nbkr.kg/index1.jsp?item=118&lang=ENG&material=48934`
*   [7] UNODC - Seminar Series Fortifies Kyrgyzstan's Approach to Cryptocurrency Regulation (Apr 2024): `https://www.unodc.org/centralasia/en/news/a-milestone-achieved_-unodcs-seminar-series-fortifies-kyrgyzstans-approach-to-cryptocurrency-regulation.html`
*   [8] YB Case - Regulation of crypto business in Kyrgyzstan (July 2024): `https://ybcase.com/en/blog-en/regulation-of-crypto-business-in-kyrgyzstan`
*   [10] Акчабар - National Bank studying cryptocurrencies (Jan 2025): `https://www.akchabar.kg/en/news/nbkr-izuchaet-kriptovalyuty-no-poka-ne-gotov-vklyuchat-ikh-v-rezervy/`
*   [12] Axton Law Firm - Requirements for crypto exchangers and exchanges (July 2024): `https://axtonlaw.com/en/requirements-of-the-legislation-of-the-kyrgyz-republic-for-the-implementation-of-activities-of-crypto-exchangers-and-crypto-exchanges/`
*   [13] Akchabar.kg - Kyrgyzstan no longer trusts unsecured crypto assets (Jan 2025): `https://www.akchabar.kg/en/news/tolko-s-obespecheniem-kyrgyzstan-bolshe-ne-doveryaet-neobespechennym-kriptoaktivam/`
*   [14] CryptoNewsLand - Kyrgyzstan Aims to Integrate Cryptocurrencies with Licensed Crypto Banks (Jan 2025): `https://cryptonewsland.com/kyrgyzstan-aims-to-integrate-cryptocurrencies-with-licensed-crypto-banks/`
*   [15] Scorechain - Kyrgyzstan Crypto Regulations 2025: `https://www.scorechain.com/blog/kyrgyzstan-crypto-regulations-2025`
*   [16] AA Lawrange - Obtaining a crypto license in Kyrgyzstan: `https://lawrange.net/en/services/crypto-license/obtaining-a-crypto-license-in-kyrgyzstan/`
*   [18] Ekonomika.kg - Licensed crypto businesses begin to appear (via Google Translate/Interpretation): Likely refers to `https://ekonomika.kg/` or related publication discussing the 2022 law and licensing. (Direct link to specific English article not found in search results, but content corroborated by other sources).
*   [19] Kriptomat - KYC/AML/CTF Policy (General example, mentions Kyrgyzstan): `https://kriptomat.io/legal/kyc-aml-ctf-policy/` (Illustrates typical KYC requirements applicable globally, including in regulated environments like Kyrgyzstan).

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**End of Report**