On 2 December, the Business Development and Investments Council under the Cabinet of Ministers of the Kyrgyz Republic, together with its partners, held the first specialised practical forum in Bishkek titled “Eurobond Issuance: From Theory to Practice.”
The event served as an important platform for discussing concrete steps to support Kyrgyz companies and financial institutions in entering international capital markets and shaping a full-fledged external borrowing framework for the Kyrgyz Republic.

The forum brought together representatives of government bodies, financial institutions, major national companies, and international advisers. Participants examined in detail the essential components of preparing for a Eurobond issuance, including internal corporate procedures, foreign regulatory requirements, engagement with rating agencies, disclosure standards, and modern approaches to risk management.

In his opening remarks, Uluk Kydyrbaev, Head of the Secretariat of the Council, noted:
“The Kyrgyz Republic has significant potential for corporate sector growth and attracting external capital. To unlock this potential, we must continue reforms, strengthen the role of the private sector, expand access to new financing instruments, and create an environment in which investors can operate with confidence.”

Developing the Eurobond market is viewed as a strategic priority for diversifying financing sources, supporting large-scale investment projects, and strengthening international investor confidence in the Kyrgyz Republic.

As a result of the discussions, participants formed a consolidated understanding of the next steps required both from potential issuers and from state institutions. The insights and recommendations generated during the forum will be used by the Council in improving the regulatory framework, advancing market infrastructure, and deepening cooperation with international financial institutions and investors.

The Council will continue to serve as a reliable institutional platform where international expertise aligns with the practical needs of domestic businesses and government stakeholders. Through strengthened dialogue and the development of modern capital-raising tools, the Council contributes to increasing investment inflows and creating conditions for accelerated socio-economic growth of the Kyrgyz Republic.

In recent years, stablecoins have moved far beyond being an exotic product of the crypto market. They have effectively become a standard tool for payments, value storage, and a key element of the infrastructure used by exchanges, DeFi platforms, and payment services.

Their core idea is straightforward: to provide users with a digital instrument whose value is closely pegged to a clear underlying asset – most often the US dollar or another fiat currency, and in some cases gold or a basket of assets. For businesses, this is a way to make payments faster and cheaper. For retail users, it is a way to reduce exposure to the volatility of traditional cryptocurrencies.

In parallel, a broader trend is taking shape – the tokenization of real-world assets (Real World Assets, RWA). This involves moving not only money, but also real estate, debt instruments, commodity assets and other familiar financial instruments into digital form.

Against this backdrop, it is logical to look at both the global market and how the Kyrgyz Republic positions itself within it. This article provides a general overview, complemented by expert commentary from Temir Kazybay, Chair of the Association of Virtual Asset Market Participants (AURVA).

Stablecoin Models: Which Designs Appear More Resilient?

In current practice, several main approaches to structuring stablecoins can be distinguished: fully fiat-backed models, crypto-collateralized models, algorithmic designs, and hybrid structures. After a period of experimentation with different schemes, the market has clearly shifted towards more conservative designs, where the nature of the backing and the legal framework are transparent and understandable.

The position of the professional community is well reflected in Temir Kazybay’s answer to the question of which stablecoin models he considers the most resilient.

Which types of stablecoin backing do you consider the most resilient? What are their strengths and weaknesses?

“I consider the most resilient those stablecoin models that have achieved a balance between technological efficiency and legal reliability, which in today’s environment means two types:

Strictly regulated fiat-backed stablecoins (for example, USDC). Their strength lies in a maximum peg to a fiat currency (1:1), which ensures low volatility. Their weakness is a high level of custodial and regulatory risk, since users must fully trust the centralized issuer, its financial integrity, and its compliance with stringent global standards (for example, MiCA).

Hybrid models (partially backed). After the collapse of purely algorithmic systems, the market shifted to hybrid designs. Their strength is that they combine partial backing (by crypto or fiat assets) with algorithmic mechanisms. This provides greater decentralization than fiat models, while at the same time reducing the risks inherent in fully unbacked systems. Hybrid stablecoins demonstrate the highest practical resilience in conditions of market shocks.

A key factor for resilience is not only the quality of the backing, but also liquidity on the secondary market. In the absence of sufficient liquidity, even a perfectly backed stablecoin can lose its peg (de-peg) and become vulnerable to manipulation.”

In practical terms, this means the following. First, investors and regulators today are interested not only in the formal fact that “there is backing”, but in its structure, the quality of the underlying assets, and how easily liquidity can be accessed. Second, confidence in the issuer and in the jurisdiction in which it operates becomes at least as important as the technology itself.

Tokenization and International Trends: From Speculation to an Institutional Market

The global virtual asset market is gradually moving out of a phase of purely speculative interest and entering a stage of institutional adoption. Large funds, banks and corporates are entering this space, while regulators are developing dedicated regimes for working with digital assets and stablecoins.

The key trends of the current phase are described in detail by Temir Kazybay.

In your view, how is the global market for tokenization and virtual assets developing? Which trends are currently the most significant?

“The global market is going through a phase of institutionalization and maturation. We are seeing a fundamental shift from the speculative interest that characterized previous cycles, towards acceptance by large, conservative players.

Two trends are particularly significant:

Institutional Adoption. Large investment funds, banks and corporate treasuries are actively entering the sector through regulated financial instruments such as ETFs on digital assets. This inflow of ‘sticky’ capital reduces historic volatility and increases overall market stability.

Tokenization of Real Assets (RWA Tokenization). This is the most explosive and transformative trend. RWA tokenization converts traditional assets (real estate, bonds, receivables) into digital tokens, making them liquid and available 24/7. Forecasts indicate that this market could grow to USD 9.43 trillion by 2030. Institutional investors are already actively tokenizing US Treasury obligations, which reflects a high level of trust in this technology. At the same time, the success of RWA depends on the creation of reliable legal structures (SPVs) and the introduction of technological standards with embedded compliance (for example, ERC-7518) to meet global regulatory requirements.”

In other words, tokenization of real assets is no longer a theoretical scenario but an emerging segment of the global capital market. At its core are legal structures (such as SPVs), clear investor rights and protection in case of default, robust compliance standards and predictable regulation across jurisdictions.

Kyrgyz Republic: Legal Framework, USDKG and Market Development Challenges

The Kyrgyz Republic is one of the few countries in the region where virtual assets are regulated by a dedicated law. The Law of the Kyrgyz Republic “On Virtual Assets” has legalized the circulation of such instruments, defined the main types of activities (mining, issuance and circulation of virtual assets, services of VASPs), and introduced licensing for exchanges, exchange points and other service providers.

Building on this framework, the launch of the gold-backed stablecoin USDKG became the next important step. Its issuance is carried out by a company with state participation, while operational management has been delegated to the private sector. The instrument is presented as part of the country’s financial infrastructure and a potential mechanism for settlements, including at the regional level.

At the same time, the market is still forming and remains highly sensitive to reputational risks. The experience with MCN Coin, where citizens suffered significant losses, has clearly demonstrated how important it is to distinguish between licensed, regulated projects and initiatives without a transparent legal basis.

In this context, it is particularly important to understand how the expert community assesses the current situation and the next steps.

How would you assess the current situation on the digital asset market in the Kyrgyz Republic? What steps have already been taken and what still needs to be done?

“Kyrgyzstan has taken up a strategically advantageous position in Central Asia.

The following steps have been taken:

A Legal Framework Has Been Created. The Law of the Kyrgyz Republic ‘On Virtual Assets’ (2022) was adopted, which legalized the circulation of virtual assets and introduced mandatory licensing for virtual asset service providers (VASPs), including crypto exchanges and exchange offices. This creates a civilized legal environment.

USDKG Has Been Launched. The issuance of the state-supported stablecoin USDKG, backed by gold, is a landmark step. Issuance with state participation ensures a maximum level of institutional trust, while operational management by the private sector preserves flexibility. USDKG is positioned as an important instrument for regional settlements.

What remains to be done:

Strengthen Compliance and Supervision. It is necessary to set out in detail and effectively implement AML/KYC requirements, aligning national norms with international FATF standards. This is a key step in countering the shadow market and increasing the confidence of international partners.

Eliminate Regulatory Gaps. The legislation needs to be further developed in terms of taxation of operations with virtual assets and mechanisms for investor protection. A clear and balanced tax regime is a direct incentive for capital legalization.

Stimulate Innovation. Regulatory sandboxes are needed to test RWA tokenization projects, which will allow Kyrgyzstan to move from simply regulating cryptocurrencies to the genuine digitalization of the economy.”

In summary, the country already has three key elements in place: a basic law, a transparent state-backed stablecoin structure, and institutional players. However, sustainable market growth will require finalizing the tax regime, strengthening investor protection and ensuring that AML/KYC requirements are implemented in practice, not only on paper.

The Role of AURVA: Standards, Awareness and Dialogue with the State

A second important layer of the ecosystem is self-regulation. The virtual asset market is evolving very quickly, and this creates room for misuse and fraudulent schemes.

In this configuration, the Association of Virtual Asset Market Participants acts as an intermediary between business and the regulator, and as a driver of sectoral standards.

What is the role of AURVA in shaping a safe and well-regulated ecosystem? What priorities does the Association pursue?

“The role of AURVA is critically important as a link between the regulator (the State Financial Regulation Service, the National Bank) and market participants. We not only represent the interests of business, but also advocate for self-regulation and higher standards in the industry.

The Association’s priorities are as follows:

Standardization and Transparency. Developing and implementing sectoral codes of conduct and internal AML/KYC standards for licensed VASPs that not only meet, but exceed minimum legislative requirements. Our goal is to make Kyrgyz VASPs a regional benchmark for transparency.

Education and Protection. Carrying out active work to improve financial literacy and explain the legal difference between licensed (safe) and illegal (fraudulent) schemes. Only an informed investor can ensure the long-term health of the market.

Strategic Development. Cooperating with government bodies on a roadmap for RWA tokenization, as well as proposing balanced regulatory and tax solutions that encourage, rather than hinder, the legal growth of the sector.”

Taken together, this means that AURVA effectively acts as a “quality filter” on the market: it promotes higher standards among participants, helps citizens understand the distinction between legitimate and fraudulent schemes, and works with the state not only on classic cryptocurrency issues, but also on a strategy for tokenization of real assets.

Conclusion

Today, the Kyrgyz Republic is at an early, yet promising stage in the development of its stablecoin and virtual asset market.

On the one hand, the country already has important starting conditions in place: a dedicated law, a developing VASP infrastructure, the launch of the gold-backed stablecoin USDKG and a professional community. On the other hand, the market is still relatively small and vulnerable to negative cases, while many important questions – from taxation to investor protection mechanisms – require further refinement in practice.

In the Kyrgyz context, stablecoins and tokenization are not tools for short-term speculation, but potential building blocks of a new financial architecture: for more convenient settlements, for attracting capital into the country’s real assets, and for deeper integration of the Kyrgyz Republic into global value chains.

How far this potential is realized will largely depend on whether three elements can be combined: stable and predictable regulation, technological development of the infrastructure, and responsible behaviour by market participants.

On 25 November, the Regional Investment Council of Issyk-Kul Region held its regular meeting in the city of Karakol.
The session brought together representatives of municipal authorities, the Vice Mayor of Karakol, tourism sector stakeholders, staff of the Office of the Plenipotentiary Representative of the President of the Kyrgyz Republic in Issyk-Kul Region, as well as specialists from the Center for Public-Private Partnership (PPP).

The agenda focused on two key issues:

• Challenges related to the allocation of municipal land plots for investment projects;
• Enhancing the competencies of municipal staff in the field of PPP, including the development of a methodological guide for PPP project implementation.

During the discussions, participants emphasized the need to strengthen awareness of the work conducted by the Regional Investment Council and the PPP Center, and highlighted the importance of establishing a unified approach to managing investment projects at both the city and regional levels.

Representatives of the PPP Center reaffirmed their readiness to provide training for municipal employees on PPP requirements and procedures — from initial project development to approval and practical implementation.

The meeting concluded with an agreement to continue joint efforts aimed at improving the investment environment and strengthening the professional capacity of municipal institutions.

The work of the Regional Investment Councils (RIC) is carried out under the Offices of the Plenipotentiary Representatives of the President of the Kyrgyz Republic in the regions. The RIC Secretariats operate within the framework of a tripartite agreement between the Secretariat of the Council on Business and Investment Development under the Cabinet of Ministers of the Kyrgyz Republic, UNDP in the Kyrgyz Republic, and the PPP Center under the National Investment Agency. The European Bank for Reconstruction and Development (EBRD) provides support for the implementation of the Council’s initiatives.

In the Kyrgyz Republic, the predictability of the “rules of the game” for business is no longer a narrow, sectoral issue. The degree to which investors understand the logic behind government decisions, feel that their rights are protected, and trust public institutions directly affects both the sustainability of economic growth and entrepreneurs’ willingness to invest in long-term projects.

These questions - trust, legal protection and new mechanisms of state–business interaction - were at the heart of the recent National Investment Dialogue held in Bishkek. The event was organized by the National Investment Agency under the President of the Kyrgyz Republic, with the participation of the General Prosecutor’s Office, business associations that are members of the Council for Business Development and Investments under the Cabinet of Ministers of the Kyrgyz Republic, as well as the Secretariat of the Council.

The Dialogue became a logical continuation of ongoing reforms aimed at improving the investment climate: the entry into force of the Law of the Kyrgyz Republic “On Investments” and the parallel modernization of supervisory and digital tools by the General Prosecutor’s Office.

A new law and practical tools

In recent months, the state has taken a number of important steps that define a new framework for investments. The Law “On Investments” strengthens basic guarantees against expropriation, enshrines the principle of equal treatment of domestic and foreign investors, and sets out the main instruments for interaction between the state and the private sector.

Building on this legal framework, the National Investment Agency is putting in place practical infrastructure to support investors, including:

• an interactive investment map of the country;
• a unified registry of investment projects;
• a chatbot and online advisory services for investors;
• “one-stop shop” services for project facilitation.

The aim is to give investors a clearer view of opportunities and procedures, reduce administrative barriers, and make interaction with public authorities less bureaucratic and more service-oriented.

In parallel, the General Prosecutor’s Office is reinforcing another crucial pillar — the protection of businesses from unjustified inspections and undue pressure. A unified system for registering inspections, the proverka.gov.kg platform and the “Business Protection” mobile application allow entrepreneurs to record the actions of supervisory bodies and submit complaints online.

How far these innovations meet business expectations can already be seen in the feedback coming from the private sector, including through platforms such as the National Investment Dialogue.

“One of the key functions of public governance is communication”

Following the Dialogue, business associations underlined that, for them, it is not only the substance of reforms that matters, but also the way the state is willing to discuss them and respond to their consequences.

Sergey Ponomarev, President of the Association of Markets of the Kyrgyz Republic, emphasized the importance of genuine communication:

“One of the key functions of public governance is communication. It is extremely important when business and public authorities can truly hear each other, and when business has the opportunity not only to raise problems, but also to propose solutions. This allows state bodies to respond promptly and remove the difficulties and barriers that the business community faces.
We see that public authorities — in this case the National Investment Agency and the General Prosecutor’s Office of the Kyrgyz Republic — have a genuine interest and readiness to meet with business and address issues jointly.
The signing of the Memorandum, which sets concrete goals for improving the investment climate, strengthening cooperation and protecting business, as well as the substantive presentations by the National Investment Agency and the General Prosecutor’s Office, were important elements of this dialogue.”

In essence, this is about gradually rethinking the role of the state — not only as a regulator and enforcement body, but also as a partner that is ready to sit at the same table with business, discuss sensitive issues and adjust practice where needed.

Property rights and the rule of law: the foundation of trust

Another key focus for the business community remains what might be called the “classics” of the investment agenda - the protection of private property and the stability of law enforcement practice.

Askar Sydykov, Executive Director of the International Business Council, put it in very clear terms:

“The protection of private property and the rule of law remain among the key issues for doing business in the Kyrgyz Republic. That is why we welcome the initiative to sign the Memorandum and will use this platform to put forward proposals on protecting business and investments.”

For investors, it is not enough that laws are adopted; how they work in practice is decisive. What criteria are used to initiate inspections? How quickly and effectively can entrepreneurs challenge the actions of officials? What safeguards exist to prevent economic disputes from being unnecessarily criminalized?

The digitalization of supervisory functions and stricter procedural requirements for inspections and criminal cases are important steps toward a more predictable and trust-based environment.

“The Memorandum has to work in practice”

The American Chamber of Commerce in the Kyrgyz Republic (AmCham) highlighted another important dimension: the need for real, measurable protection rather than simply adopting new documents.

Altynai Asanova, Executive Director of AmCham, noted:

“The National Dialogue with the National Investment Agency and the General Prosecutor’s Office is a step that should lead not to declarations, but to real protection of business. Business is the locomotive of the economy, and we expect full transparency, objectivity and predictability in the actions of supervisory bodies. The Memorandum must work in practice: every appeal from entrepreneurs should be handled promptly, fairly and without pressure.
Such support will allow business to feel more confident and to invest in the country’s development.”

This viewpoint captures both the essence of the current moment and the expectations of the private sector: the Dialogue has taken place and the Memorandum has been signed — now the key question is how these commitments will be reflected in everyday decisions and procedures.

Digital resilience: a new dimension of confidence

Today, the investment climate is shaped not only by traditional legal guarantees, but also by digital resilience — the protection of data, the capacity to respond to cyber incidents and the clarity of rules in the digital economy.

The Association for Digital Resilience (DRA) drew attention to this dimension. Its Executive Director, Aisuluu Sydygalieva, stressed:

“The National Dialogue organized by the National Investment Agency and the General Prosecutor’s Office became an important platform for discussing systemic issues that affect the country’s cybersecurity and digital resilience. The private sector expects that such formats will strengthen the predictability of regulation and create conditions for the safe introduction of new technologies. The signed Memorandum is a significant step toward building a more resilient digital ecosystem. We believe that joint efforts by the state and business will help reduce risks, build trust and ensure the secure digital development of the Kyrgyz Republic.”

This approach is in line with global trends and with the priorities highlighted by the European Bank for Reconstruction and Development (EBRD) in its country strategy for the Kyrgyz Republic: digitalization, resilience, greater transparency and better risk management. From this perspective, the National Investment Dialogue can be seen as a first step toward a more systematic conversation on digital security for business - from the protection of commercial data to the prevention of fraud and cyberattacks.

 What the tripartite Memorandum changes

The central institutional outcome of the Dialogue was the signing of a tripartite Memorandum of Cooperation between the National Investment Agency under the President of the Kyrgyz Republic, the General Prosecutor’s Office and business associations.

The document reflects the parties’ intention to:

• strengthen legal guarantees for investors;
• improve procedures for inspections and supervision;
• establish permanent formats of dialogue between public authorities and business;
• jointly analyze systemic barriers and propose amendments to legislation and by-laws.

The Memorandum should not be viewed as a separate “new structure”, but rather as a way of codifying and strengthening principles and responsibilities within a dialogue that has already been evolving in practice.

Continuing the dialogue: the role of the Council

The National Investment Dialogue has become part of a broader effort to build a more systemic and predictable relationship between the state and the business community. At the core of this agenda lie clear rules, protection of property rights, transparent supervisory procedures and understandable feedback mechanisms for investors and businesses.

Within this emerging system, the Council for Business Development and Investments under the Cabinet of Ministers of the Kyrgyz Republic acts as a stable platform. It is here that proposals from business associations are consolidated, discussed and then brought to the attention of relevant public authorities. The Secretariat of the Council helps structure these initiatives and link them to ongoing reforms in regulation and law enforcement practice, including in the area of investment policy and investor protection.

Taken together, the National Investment Dialogue, the tripartite Memorandum and the work of existing dialogue platforms demonstrate a gradual but important shift: from fragmented consultations to a more institutionalized architecture of partnership between the state and business. If this architecture continues to be filled with concrete decisions and actions, it can become a solid basis for a more transparent, stable and predictable business environment in the Kyrgyz Republic.