How Kyrgyzstan is Becoming the Switzerland of Crypto

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Kyrgyzstan has launched a state stablecoin backed by physical gold, built its own gold vault, and brought Binance founder Changpeng Zhao into its crypto policy circle. Zhao, widely known as CZ, now holds a Kyrgyz passport and serves as an adviser to the country’s president, according to Arsen Edilbek uulu, co-founder of KYTLABS and head of fintech consulting in Kyrgyzstan. Speaking to BeInCrypto Editor-in-Chief Vladimir Arkhireysky, Arsen said Kyrgyzstan is trying to position itself as a regional crypto hub with lighter regulation, banking support, and infrastructure for tokenized real-world assets. The country’s approach stands out in the region. While Russian regulators continue to move cautiously, Kyrgyzstan is building state-backed crypto products and trying to attract global players. Kyrgyzstan Launches Two State Stablecoins According to Arsen, Kyrgyz President Sadyr Japarov is deeply involved in the country’s crypto market strategy and understands the sector well. The government has worked with major market participants and is trying to create clear mechanisms for crypto companies to operate in the country. As part of this strategy, authorities decided to develop a state stablecoin. The Ministry of Finance received a budget of about $100 million to buy physical gold. That gold was placed into reserves and used as backing for a dollar-equivalent token. The stablecoin is backed by physical gold held in a new Kyrgyz gold vault, which Arsen described as a local version of “Fort Knox.” The token is fully owned by the Ministry of Finance. A second stablecoin is backed by Kyrgyzstan’s national currency, the som. It was launched in partnership with Binance on BNB Smart Chain. That project falls under the National Agency for Virtual Assets and the National Council for Virtual Assets. CZ is a member of that council. New Gold Vault Could Support RWA Projects Kyrgyzstan has also built a large gold storage facility. Arsen said the vault has enough capacity to hold reserves from neighboring countries. He estimated that Kyrgyzstan’s own gold and foreign exchange reserves would take up less than 10% of the facility. The government’s broader goal is to turn the country into a hub for real-world asset projects. These projects could store physical gold in Kyrgyzstan and issue tokens backed by those reserves. Arsen said the strategy comes as Switzerland is losing some of its appeal as a neutral storage hub. In his view, geopolitical shifts have made Switzerland appear more politically aligned than before. For Kyrgyzstan, this creates an opening. The country wants to offer gold storage, token issuance, and a friendlier regulatory environment for crypto and RWA companies. Binance became one of the first major partners in this effort. The initial focus was to use BNB Smart Chain for tokens backed by the national currency. CZ’s Role in Kyrgyzstan’s Crypto Strategy CZ now works as an unpaid adviser to the president of Kyrgyzstan, Arsen said. Under local rules, only citizens of the Kyrgyz Republic can serve as presidential advisers. That means CZ has a Kyrgyz passport. Arsen said the government’s decision to bring in Binance and CZ was part of a deliberate strategy. The president’s team tracks global crypto trends and looks for organizations that see Central Asia as an important growth region. Kyrgyzstan is also trying to differentiate itself from Kazakhstan. Kazakhstan has the Astana International Financial Centre, which operates under a legal structure based on English law. Arsen said that the model creates more complications for the crypto market under current conditions. Kyrgyzstan chose a softer regulatory approach. The goal is to give companies room to test the region while giving local banks time to prepare for deeper crypto integration. Banks Prepare for Crypto Custody Arsen said the cost of maintaining a license for a virtual asset service provider, broker, or securities dealer in Dubai can exceed $1 million per year. In Kyrgyzstan, he said, the cost is several dozen times lower while offering comparable opportunities. He also said crypto companies often face banking refusals in Dubai. In Kyrgyzstan, banks are more willing to serve them. The country is now preparing changes to its banking law. These changes would allow banks to interact with virtual assets and act as custodians. Arsen expects the reforms to bring larger players into the market. He also said bank apps could soon include Tether-based transfer systems. Crypto Is Already Entering Banking Apps Some Kyrgyz banks have already added crypto purchases to their mobile apps. Arsen said about three banks currently offer this function. Legally, the bank does not sell crypto directly. Instead, it works through a third-party partner. When a client agrees, the bank transfers the client’s personal and KYC data to the partner. The partner then opens a crypto account for the user. Through these banking apps, users can buy major assets such as Bitcoin and Ethereum. Stablecoins, including USDT, are also available. How Ordinary Users Use Crypto Kyrgyz citizens use crypto for investment and foreign trade, according to Arsen. Some also use USDT while traveling or making payments in China. Instead of carrying cash, they convert funds into USDT and later exchange it for local currency in the destination country. Several Kyrgyz banks are also working on crypto cards. These products are being developed under the central bank’s regulatory sandbox. Meanwhile, Kyrgyzstan’s local payment system, Elkart, is integrating with China’s WeChat. Arsen said this could eventually open access to more than 60 countries in Asia. For now, Kyrgyzstan’s strategy is clear. The country wants to use crypto regulation, banking access, and gold-backed infrastructure to become a regional digital asset hub.

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