Kyrgyzstan to permit banks, financial institutions to conduct crypto transactions

Kyrgyzstan is preparing to permit banks and other financial institutions to officially conduct cryptocurrency transactions.

The changes, which will let them buy and sell digital coins, come amid new sanctions over the nation’s role in helping Russia bypass restrictions.

Kyrgyzstan to authorize banks to work with cryptocurrencies

The government of Kyrgyzstan plans to allow banks and non-bank financial institutions to trade and convert cryptocurrencies on behalf of their clients.

This will be done through amendments to the country’s law “On Virtual Assets” drafted by the Ministry of Economy and Commerce, local and regional media unveiled Wednesday.

The respective bill has been published for public discussion, according to reports by the Russian crypto news outlet Bits.media, the Northern Newspaper website and Inbusiness.kz.

Under the updated law, banking organizations and other firms supervised by the National Bank of the Kyrgyz Republic will be able to offer services for the purchase, sale, and exchange of digital coins.

These kinds of transactions are currently restricted for most entities in the financial sector, which can mainly store and transfer cryptocurrencies for customers without directly accruing or trading them.

As highlighted by the explanatory note to the draft law, the proposed amendments are meant to develop and increase the transparency of Kyrgyzstan’s virtual-asset market.

The authors of the bill also hope that the regulation of crypto transactions through the banking sector will facilitate the integration of digital currencies into the traditional financial system.

They are convinced the legalization of these operations will help attract foreign investment, increase tax revenues to the state budget, and create more jobs in the fintech economy.

Is Kyrgyzstan becoming Russia’s crypto hub in Central Asia?

The sponsors of the legislation also acknowledged the growing interest in cryptocurrencies in Kyrgyzstan and the rapid expansion of their market.

Offering legal banking services for the digital assets should thus bring more of the associated financial flows out of the shadows.

Cryptocurrency exchanges could become one of these services as the revamped crypto act will allow banks to launch coin trading platforms.

At the moment, crypto transactions are conducted by specialized exchange offices and other licensed providers of virtual-asset services.

The Kyrgyz financial watchdog has issued 148 licenses to participants in the crypto market, the vast majority of which are to exchange operators.

Among them is the one who runs the recently hacked Grinex. The exchange is believed to be used by Russian players to circumvent international financial restrictions.

Grinex was established in Kyrgyzstan last spring as the successor of the notorious Russian exchange Garantex, which was shut down in a U.S.-led effort in March last year.

The issuer of a Russian ruble-pegged cryptocurrency A7A5, an entity called Old Vector, is also registered in the former Soviet republic.

The stablecoin, which is the largest among tokens not tied to the U.S. dollar, has processed well over $100 billion in transactions since its launch in early 2025.

A lot of the A7A5 tokens in circulation are traded through Grinex. Entities linked to the Russian crypto are sanctioned by Western governments, including the U.S., the U.K., and the EU.

Companies like these paid Kyrgyzstan 2.1 billion soms (over $24 million) in taxes for the first 11 months of last year, up from 227 million soms for the whole of 2024, the economy ministry said.

According to official Kyrgyz estimates, the total turnover of virtual assets in the country exceeded 2.63 trillion soms (more than $30 billion) during the same period in 2025.

When the new bill is passed by the parliament, the executive power and the central bank in Bishkek will have another six months to update the rest of the country’s regulatory framework.

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