Kyrgyzstan has enacted a law giving legal tender status to the “digital som,” its CBDC. President Zhaparov authorized the National Bank to oversee the currency’s issuance and set rules for its circulation. A final decision on its formal launch is pending until late 2026, while testing is scheduled for this year. Former Binance CEO will advise on blockchain regulations to further bolster the country’s economic landscape.
Kyrgyzstan’s President Sadyr Zhaparov has formally enacted a constitutional law that paves the way for a central bank digital currency (CBDC) pilot project while granting legal tender status to the “digital som,” the digital version of the national currency. This law endows the National Bank of the Kyrgyz Republic with exclusive rights to issue the digital som, as well as to set the rules governing its issuance and circulation, as reported by the presidential office on April 17.
However, a definitive decision on the formal issuance of the CBDC is not anticipated until late 2026, according to a report by Trend News Agency. Should the central bank elect to proceed with the digital som, it will have to establish cryptographic safeguards to protect the currency from fraud. Testing for the digital som platform is expected to begin later this year.
Zhaparov’s signature on the law follows a parliamentary approval by Kyrgyzstan’s Jogorku Kenesh on March 18. The initiative to develop CBDCs has faced criticism from certain members of the cryptocurrency community due to concerns regarding financial privacy and potential governmental overreach. Although 115 countries have initiated CBDC projects, only four—namely the Bahamas, Nigeria, Zimbabwe, and Jamaica—have officially launched their versions.
Kyrgyzstan is also advancing in the realm of cryptocurrency, as evidenced by former Binance CEO Changpeng “CZ” Zhao’s recent agreement to advise on blockchain regulations after signing a memorandum of understanding with the foreign investment agency. President Zhaparov has indicated that this collaboration aims to boost economic growth and enhance the security of virtual assets, thereby opening new avenues for businesses and the community.
In addition, Kyrgyzstan is recognized for its favorable conditions for cryptocurrency mining, attributed to its vast renewable energy resources that remain largely untapped. Currently, over 30% of the nation’s energy supply originates from hydroelectric power plants, yet only 10% of its hydropower potential has been harnessed, as reported by the International Energy Agency.
In summary, Kyrgyzstan is positioning itself at the forefront of digital currency initiatives by enacting a law that endorses the digital som as legal tender. While the official issuance of the CBDC remains dependent on further evaluations, the government’s proactive steps are indicative of its commitment to embrace cryptocurrency technology. Furthermore, collaborations with prominent industry figures underscore the country’s vision to enhance its economic landscape through digital assets.
Original Source: cointelegraph.com
