Kyrgyzstan’s bold crypto move: new bill unveils state reserve and mining plans
In a significant leap towards embracing the digital asset revolution, Kyrgyzstan is making waves with a groundbreaking new bill that introduces the concept of a “state crypto reserve” and officially recognizes “state crypto mining.” This Central Asian nation, increasingly seen as a key player in the region’s burgeoning crypto market, is pushing forward with legislation designed to establish a formal state-owned cryptocurrency reserve and foster the growth of its broader digital asset industry.
Kyrgyz lawmakers recently passed amendments to the “On Virtual Assets” bill through three readings in rapid succession, effectively solidifying these pioneering terms into law. The announcement from the parliament marks a bold step for a country looking to integrate digital assets into its national financial strategy.
Presented by Economy and Commerce Minister Bakyt Sydykov, the comprehensive bill tackles various facets of crypto adoption within Kyrgyzstan. It aims to create a robust legal framework not only for the issuance and circulation of stablecoins but also for the tokenization of real-world assets (RWAs) and even for direct state-run operations within the crypto sphere.
During a recent committee meeting, Minister Sydykov explained the rationale behind a state crypto reserve. He stated that such a reserve would enable the state to build its own assets in cryptographic form. This would be achieved through several mechanisms, including direct crypto mining, the tokenization of tangible real-world assets, and the issuance of stablecoins that are backed by fiat currency. The core idea, according to Sydykov, is to leverage this crypto reserve as a tool to bolster Kyrgyzstan’s financial stability through diversification and by embracing innovative new methods of asset accumulation.
Addressing potential concerns, particularly regarding energy consumption – a common point of contention for crypto mining operations – Sydykov clarified that the government’s mining activities would not be exempt from the standard mining tariffs established by the state. He specifically quashed speculation about state-run mining farms operating out of critical infrastructure like thermal power plants, emphasizing that the primary purpose of such facilities is not cryptocurrency mining.
While the draft bill has successfully navigated parliamentary readings, it still awaits the signature of Kyrgyzstan’s President Sadyr Japarov. Notably, President Japarov has already shown a keen interest in digital finance, having signed a law concerning a central bank digital currency (CBDC) just a few months prior.
The proposed crypto reserve isn’t envisioned as a collection solely of well-known pure crypto assets like Bitcoin. Instead, the bill indicates it would be a diverse portfolio of digital assets owned by the state. The text of the bill defines a “state cryptocurrency reserve” as “a set of virtual assets owned by the state and formed through their mining, issuance, tokenization and acquisition.” Crucially, the legislation stipulates that the procedure for the formation, storage, management, and utilization of this cryptocurrency reserve will be determined directly by the President of the Kyrgyz Republic.
Kyrgyzstan’s proactive stance on a state crypto asset reserve comes at a time when neighboring nations, such as Kazakhstan, are also actively exploring similar initiatives. Just recently, Kazakhstan’s President Kassym-Jomart Tokayev urged his government to prioritize the development of crypto and AI within the country, including working on the possibility of establishing their own strategic crypto reserve. This regional trend suggests a growing recognition among Central Asian nations of the strategic potential that digital assets hold for national economic development and diversification.
