Kyrgyzstan is preparing to implement the Travel Rule for virtual asset transfers

Kyrgyzstan has begun preparations to implement the Travel Rule—an international FATF standard that requires virtual asset service providers to share information about the sender and recipient of transfers with one another. An interagency working group will be established to develop the implementation mechanism.

The initiative was launched by the National Agency for Virtual Assets and Blockchain Technologies under the President of the Kyrgyz Republic. Representatives from the State Financial Intelligence Agency, the Financial Supervisory Authority, and the National Bank also participated in the discussion.

At the meeting, the parties discussed what specific data should accompany virtual asset transfers, how this information will be transmitted between service providers, where and how it should be stored, and how government agencies will interact with market participants.

The goal is to make crypto transfers through regulated services more similar to bank transfers in terms of identifying the parties involved in the transaction. If the Travel Rule requirements are implemented, crypto exchanges, exchange services, and other virtual asset service providers will be required to share specific information about the sender and recipient of the transfer.

This approach is used to increase the transparency of transactions and combat money laundering and terrorist financing. The Travel Rule is part of the FATF’s recommendations and applies to the virtual asset sector as an extension of the requirements in place within the traditional financial system.

Kyrgyzstan has also studied the experiences of Singapore, the European Union, the United Kingdom, Japan, Switzerland, and the UAE, where similar requirements are already in place or incorporated into crypto market regulations.

Following the meeting, the participants agreed to establish an interagency working group. The group will analyze existing legislation and determine how the Travel Rule requirements can be implemented in Kyrgyzstan, taking into account the specific characteristics of the local market.

Specific timelines for the implementation of the new requirements, the list of mandatory data, and the procedure for transmitting that data have not yet been determined. These issues are precisely what the working group will be tasked with addressing.

Previously, the National Agency for Financial Markets (NAVA) had already released a package of documents for public comment regarding the regulation of cryptocurrency exchanges, currency exchange services, stablecoins, and tokens backed by real assets. The agency also announced its intention to bring the regulation of virtual assets into line with international standards.