Kyrgyzstan expands regulatory sandbox to cover crypto banking

The monetary authority of Kyrgyzstan is preparing to greenlight the testing of banking services involving cryptocurrency and fintech solutions.

The central bank is now proposing to expand the regulatory framework for financial innovations in order to accommodate trials involving digital assets.

Kyrgyzstan’s central bank to facilitate trials of crypto services

The National Bank of the Kyrgyz Republic (NBKR) has drafted a new resolution to amend the “special regulatory regime” (SRR) for advanced financial technologies, which was created six years ago.

The regulator now seeks to improve the legal mechanism for its implementation as a means to experiment with innovative banking operations and services in a controlled environment.

The bank said the document takes into account accumulated experience in the framework’s application and the emergence of new technological solutions in the financial market.

It also reflects legislative changes from the past months and years, most notably, those regulating virtual assets and related transactions, the Kyrgyz news outlet Caravan Info revealed on Tuesday.

Earlier in September, Kyrgyzstan’s parliament adopted a law “On Virtual Assets,” as reported by Cryptopolitan. The bill is designed to expand regulation for cryptocurrencies, stablecoins and other digital tokens.

The legislation introduces licensing for crypto platforms, allows the state to launch and operate mining facilities, and underpins the establishment of a cryptocurrency reserve in the Central Asian nation.

The monetary authority also made it clear the amendments are aimed at strengthening the protection of rights and interests of consumers.

This includes clarifying the requirements for admitting providers to the sandbox and ensuring adequate risk management when introducing innovative products.

Kyrgyz regulators warn banks not to use the sandbox to bypass rules

The draft resolution, which has been published for public consultations, is expected to increase transparency in Kyrgyzstan’s growing fintech space and make its solutions more accessible.

It also explains some current criteria for companies willing to join the SRR. For example, it highlights that a service or operation they want to test must complement their main activity, and not be the only focus of their business.

What remains unchanged is the set of standards for financial solvency as well as certain compliance requirements.

On the other hand, the NBKR is introducing a mechanism that will allow to fast track targeted experiments with pre-determined goals.

The monetary authority emphasized, however, that the improved SRR should not be viewed as a way to circumvent other laws and rules by banking institutions.

Since its introduction in August 2020, the special regulatory regime has been utilized to test alternative solutions in real market conditions, the report noted.

Participating financial firms have the opportunity to verify the viability of their new offerings, while regulators gain access to data that can be used for economic analysis and supervision.

Kyrgyzstan’s crypto sector has been rapidly developing and according to a recent government estimate, domestic exchanges processed $11 billion in the first seven months of 2025.

At the same time, the high turnover has caused concerns in the West that Russia is using Kyrgyz-registered crypto platforms to circumvent international financial restrictions and fund its ongoing war in Ukraine.

These have resulted in sanctions imposed by both the U.S. and the U.K. against Kyrgyz crypto networks and some of Kyrgyzstan’s banks. In August, the country’s president, Sadyr Zhaparov, urged his U.S. counterpart Donald Trump and British Prime Minister Keir Starmer not to politicize economy.

If you're reading this, you’re already ahead. Stay there with our newsletter.