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Finance

Central Asia’s Digital Currency Ambitions: New Opportunities and Old Constraints

Central Asia is entering a period of accelerated financial transformation. Kyrgyzstan has launched one of the world’s first state-backed gold-backed stablecoin, USDKG, a digital asset fully backed by physical gold and issued under the direct supervision of the Ministry of Finance. Simultaneously, Kazakhstan is advancing one of the most mature central bank digital currency (CBDC) initiatives in the post-Soviet space: the digital tenge (national currency). Uzbekistan is developing its own digital economy framework, while Tajikistan and Turkmenistan are slowly initiating financial modernization. Amid these developments, Central Asia is emerging as a surprisingly bold laboratory for digital finance. This raises a pressing question: can the region develop a unified digital currency ecosystem that reduces dollar dependency, facilitates cross-border transactions, and enhances economic sovereignty? Strategic Logic of Digital Integration The idea of a regional digital currency is no longer utopian. Central Asia is one of the world's most significant hubs for cross-border remittances. In 2024 alone, migrants sent back a record $5.8 billion to Tajikistan (45% of GDP), approximately $15 billion to Uzbekistan, $2.9 billion to Kyrgyzstan, and $258 million to Kazakhstan. The current system is costly, slow, and heavily reliant on the dollar. Digital currencies could drastically reduce transaction costs for both migrant workers and businesses. In remote areas, where banking infrastructure is underdeveloped, cash still dominates. CBDCs could allow citizens to access state payment services directly, bypassing commercial banks. Digital finance also offers protection against external economic shocks, sanctions, and volatility. Coupled with the digitalization drives in Kazakhstan, Uzbekistan, and Kyrgyzstan, and regional integration ambitions, such as Uzbek President Shavkat Mirziyoyev’s proposal to create a Central Asian Community, conditions are forming for financial cooperation. Diverse National Models Approaches to digital currency vary significantly. Kazakhstan’s digital tenge, led by the National Bank, emphasizes institutional stability, security, and integration with existing banking systems. A full launch is expected by the end of 2025. Kyrgyzstan has taken a more unconventional route. Its USDKG stablecoin, built on the Tron blockchain and backed by gold, aims to assert financial autonomy. However, it raises concerns about transparency, sustainability, and the reaction of traditional banks. A gold-backed stablecoin also directly challenges dollar dominance. Crypto analysts such as Ryan Adams speculate that Washington may be monitoring Kyrgyzstan’s experiment closely, fearing it could inspire similar moves in India, China, and Brazil. Uzbekistan is advancing its digital economy cautiously. While its government maintains strict cryptocurrency controls, this regulatory clarity may lay groundwork for a CBDC, though it limits space for innovation. Tajikistan and Turkmenistan remain on the sidelines, but rising demographic pressures, migration, and logistics projects are nudging both toward digital finance. The lack of coordination among these models represents both an opportunity for experimentation and a barrier to integration. Key Challenges Despite growing momentum, the road to a unified digital architecture in Central Asia remains fraught. The first major obstacle is regulatory fragmentation. Digital currencies require legal reforms across currency legislation, taxation, customs, and anti-money laundering/counter-financing of terrorism (AML/CFT) protocols. At present, each state operates independently, making regional harmonization...

Finance

Kazakh Businessmen in Talks to Acquire Stakes in KazZinc and Kazakhmys

Kazakh entrepreneurs Shakhmurat Mutalip and Nurlan Artikbayev are in negotiations to acquire stakes in two of Kazakhstan’s largest industrial giants, KazZinc and Kazakhmys, according to a report by Bloomberg, citing unnamed sources. Bloomberg reports that Mutalip, the owner of construction firm Integra Construction KZ, has been offered the chance to purchase Glencore’s 70% stake in KazZinc. Meanwhile, Artikbayev, the majority shareholder of Qazaq Stroy, is in discussions over acquiring a stake in Kazakhmys. Sources emphasized that the negotiations are still in early stages. No final agreements have been reached, and key terms such as pricing and payment structures remain unresolved. As of the end of 2024, 99.1% of Kazakhmys shares are held by Kazakhmys Copper, through its parent entity Kazakhmys Holding Limited, which is registered with the Astana International Financial Centre (AIFC). KazZinc is majority-owned by Glencore International AG, which controls 69.74% of the shares. The remaining 29.82% is held by the state-owned enterprise Tau-Ken Samruk, with 0.44% owned by minority shareholders. Both businessmen have recently been received by President Kassym-Jomart Tokayev. Artikbayev, ranked 44th on Forbes Kazakhstan’s 2025 list, met with the president on November 4, while Mutalip met with him on November 21. Both meetings focused on the development of Kazakhstan’s construction sector and the role of private business in infrastructure projects. Financial analyst Rasul Rysmambetov suggested that the potential deals reflect an effort to consolidate domestic control over key strategic assets. “This looks like an unfolding of what I call economic nationalism. Local players are expected to control subsoil assets, as they can invest more intensively in downstream processing. Much like Korea’s chaebols, the goal will be to extend the value chain within the country,” he wrote on his Telegram channel.

Finance

Over 62% of All Microloans in Kyrgyzstan Are for Consumer Purposes

Between January and September 2025, microcredit organizations in Kyrgyzstan issued loans totaling approximately $720 million to nearly 797,000 recipients, according to the National Statistics Committee. These figures highlight the growing role of microfinance in a country with a population of just over 7 million. While the number of borrowers declined by 13.2% compared to the same period in 2024, the total volume of microloans increased by 33.6%, suggesting a trend toward larger individual loan sizes. Bishkek, the capital, accounted for the largest share of microloan recipients, with nearly 259,000 people, 32.5% of the nationwide total, taking out loans during the nine-month period. Consumer lending dominated the sector, making up more than 62% of all microloans issued. Loans for agricultural development comprised just over 15%, while those for trade and the catering sector represented 9.5%. Compared to the same period last year, the share of consumer loans rose by 9.7%, while the share of agricultural loans declined by 4.6%, reflecting a shift in borrowing priorities. Kyrgyzstan currently has 21 commercial banks and 515 non-bank financial institutions, including microcredit organizations. The financial sector’s client base grew by 40% in the first nine months of 2025, largely due to increased adoption of mobile banking and the rise of online lending through microfinance platforms. In response to growing concerns about digital financial fraud, Kyrgyzstan introduced a self-restriction mechanism on November 1. The system allows individuals to voluntarily block new loans or credit being issued in their name, an effort to protect consumers from unauthorized lending using forged or stolen identification documents. Under the new regulation, banks and microfinance institutions are legally required to verify whether a client has enacted a self-restriction before issuing a loan.

Finance

Car and Real Estate Sellers in Kazakhstan to Receive Payment Only After Buyer Rights Registered

Kazakhstan is preparing to introduce a new payment system for vehicle and real estate transactions, in which funds deposited via banks will be temporarily blocked until ownership rights are officially registered in the buyer’s name. The initiative, known as the “Safe Transaction” system, is being developed jointly by the Ministry of Internal Affairs and the Ministry of Artificial Intelligence and Digital Development. A pilot launch is expected soon, with a full-scale rollout planned for April next year. The system was discussed during the first meeting of the working group on the integration of the digital tenge into public finance operations. The digital tenge (national currency) refers to marked digital budget funds designated for specific contractual purposes. These funds cannot be converted into cash or conventional non-cash forms and are unblocked only after work or services are completed and verified or once contract terms are fully met. The mechanism aims to automate oversight of targeted budget spending and mitigate embezzlement risks. Pilot projects involving digital tenge have already revealed several technical challenges. For example, in the road construction sector, the absence of a unified methodology for standardizing goods, services, and materials complicates implementation. Additional requirements include digitizing design and estimate documentation, integrating the platform with verified supplier databases, and introducing transaction verification protocols and cost reconciliation tools. Binur Zhalenov, advisor to the chairman of the National Bank, noted that the pilot phase exposed significant discrepancies in pricing for some materials and services, which require industry-specific evaluation to assess properly. The digital tenge is technically prepared for certain types of public procurement and is expected to improve transparency in financial transactions. Authorities anticipate that it will enhance budget revenue collection, reduce tax-related risks, and curb the use of fictitious financial schemes. Over the medium term, the digital tenge is projected to be used in the implementation of at least 100 government projects. The National Bank officially announced its launch just over a year ago.

Finance

Kazakhstan to Develop AI Rules for Financial Sector

Kazakhstan’s Agency for Regulation and Development of the Financial Market (ARDFM) plans to establish a regulatory framework governing the use of artificial intelligence (AI) in the country’s financial sector. The announcement was made by ARDFM Chair Madina Abylkassymova during the 13th Congress of Financiers of Kazakhstan. According to the regulator, 75% of banks in Kazakhstan already use AI technologies in areas such as credit scoring, fraud detection, marketing, and customer service chatbots. However, adoption levels vary significantly: large banks have made substantial progress, while medium and smaller institutions are primarily conducting pilot projects. Abylkassymova stressed that the widespread use of AI is imminent, necessitating the development of unified standards and regulatory guidelines. “There is currently no dedicated document regulating artificial intelligence, but one will certainly be introduced,” she said. “The main challenges today involve the absence of uniform standards, inconsistent data quality, and a shortage of qualified specialists. At present, each financial institution independently sets objectives and configures its AI systems, but without common rules. We must therefore rely on existing regulatory practices and client-service standards.” She added that regulatory measures should be proportionate to the level of risk associated with specific financial transactions. “We will conduct a detailed risk assessment. We do not believe every application of AI must be tightly regulated. Low-risk areas may require light oversight, whereas high-risk applications, particularly those with systemic implications, should face stricter controls.” Abylkassymova identified data quality as a major obstacle to AI development. She noted that information is often fragmented and stored across various systems and formats, increasing the likelihood of errors in AI-driven decision-making. A proposed legislative initiative includes the creation of a unified database of anonymized data accessible to market participants, aimed at improving AI model accuracy. Ongoing discussions are addressing whether access to government databases should be free or paid, and whether different pricing models should apply depending on the purpose of use. “We place extensive requirements on financial institutions, including offering access to government services through their digital platforms,” Abylkassymova explained. “To fulfill these functions, banks need access to public databases. So, the question is: is it justified to charge for such access? That’s one scenario. It’s another matter entirely when access is sought for purely commercial gain.” She concluded that the future AI framework will be developed in consultation with market stakeholders, with the goal of striking a balance between enabling innovation and safeguarding financial system stability. Previously, The Times of Central Asia reported that Kazakhstan’s Ministry of Finance is piloting a digital platform that leverages AI and big data to help entrepreneurs identify the most profitable sales locations for their products.

Finance

ADB Approves $300 Million Loan to Support Small Business Growth in Uzbekistan

The Asian Development Bank (ADB) has approved a $300 million policy-based loan to boost the development of micro, small, and medium-sized enterprises (MSMEs) in Uzbekistan, with a particular focus on women-led businesses. The bank announced the decision on November 12. Of the total funding, $100 million will be provided on concessional terms to expand access to finance for MSMEs and strengthen Uzbekistan’s microfinance sector. The loan forms part of the second phase of the ADB’s Inclusive Finance Sector Development Program, which builds on earlier efforts to improve the legal and institutional framework for inclusive finance in the country. Key reforms have included raising the ceiling on microloans, modernizing microfinance regulations, joining the Women Entrepreneurs Finance Code, and introducing frameworks for Islamic microfinance. “ADB is proud to support Uzbekistan’s transition to a more inclusive and market-based financial system,” said ADB Country Director for Uzbekistan Kanokpan Lao-Araya. “This program will help unlock access to finance for the self-employed and microentrepreneurs, promote gender equality, and strengthen consumer protection in the financial sector.” The latest phase of the program introduces new policy measures aimed at enhancing responsible lending, regulating emerging products such as “buy now, pay later” services, and strengthening digital financial supervision. It also advances gender equality by supporting sectoral policies that implement gender-based financing quotas and improve the reporting of sex-disaggregated data. An evaluation of Uzbekistan’s National Financial Inclusion Strategy (2021-2023) revealed that 60 percent of adults now hold accounts with formal financial institutions, a significant gain attributed to rapid digitalization. The new program aims to further modernize the microfinance sector by allowing the creation of deposit-taking microfinance banks, two of which have already received preliminary licenses. This year marks the 30th anniversary of ADB-Uzbekistan cooperation. Since 1995, the bank has committed $14.6 billion in loans, grants, and technical assistance to the country. Uzbekistan has also been selected to chair the ADB Board of Governors for 2025-2026. Samarkand is set to host the ADB’s 59th Annual Meeting in May 2026.