Kyrgyzstan, a key emerging player in Central Asia’s crypto market, has advanced a bill to establish a state cryptocurrency reserve and support the growth of the wider digital asset industry.
Kyrgyz lawmakers have passed amendments to a bill “On virtual assets” in three readings at once, officially cementing terms like “state crypto reserve” and “state mining,” the parliament announced on Wednesday.
Presented by Economy and Commerce Minister Bakyt Sydykov, the bill addresses multiple aspects of Kyrgyzstan’s crypto adoption, including establishing a legal framework for the issuance and circulation of stablecoins, tokenized real-world assets (RWAs) and state-run industry operations.
“A crypto reserve would allow the state to accumulate its own assets in cryptographic form through crypto mining, as well as tokenization of real-world assets and issuance of stablecoins backed by fiat currency,” the minister reportedly said at a committee meeting earlier this week.
Crypto reserve as a tool to increase financial stability
According to Sydykov, a state crypto reserve would help Kyrgyzstan increase financial stability by diversification and adoption of new accumulation instruments.
He also mentioned that the government will not be exempt from mining rates established by the state in response to concerns over possible issues related to Kyrgyzstan’s energy supply.
“There is a separate tariff for mining in the country, and the state is no exception. There will be no farm at the thermal power plant, the main purpose of the thermal power plant and Kambar-Ata-1 is not mining,” Sydykov reportedly claimed during a meeting on Monday.
A mix of assets
Following parliamentary readings, the draft bill is yet to be signed by Kyrgyzstan President Sadyr Japarov, who signed a law on central bank digital currency (CBDC) just a few months ago.
According to the bill, Kyrgyzstan’s potential crypto reserve would not solely rely on pure crypto assets like Bitcoin (BTC), but would rather represent a combination of digital assets owned by the state.
Related: UK sanctions Kyrgyz banks, $9.3B crypto network tied to Russia
“A state cryptocurrency reserve is a set of virtual assets owned by the state and formed through their mining, issuance, tokenization and acquisition,” the bill text reads, adding:
“The procedure for the formation, storage, management and use of the cryptocurrency reserve is determined by the President of the Kyrgyz Republic.”
Kyrgyzstan’s moves with state crypto asset reserve came amid neighboring countries like Kazakhstan aggressively exploring similar initiatives as well.
On Monday, Kazakhstan President Kassym-Jomart Tokayev urged the government to focus on fostering development of crypto and AI in the country, including the work on a potential strategic crypto reserve.
Magazine: Can Robinhood or Kraken’s tokenized stocks ever be truly decentralized?