Kyrgyzstan Takes Major Step Toward Digital Currency Implementation

Tech

Kyrgyzstan Takes Major Step Toward Digital Currency Implementation

• Kyrgyzstan introduced the legal framework for its CBDC, the digital som, with testing set for 2025.
• Prototype testing for the digital som will begin this year, with a final issuance decision planned for 2026.

President Sadyr Zhaparov made Kyrgyzstan one step closer to becoming part of the few countries operating central bank digital currencies (CBDCs). He signed on constitutional amendments, which introduced the legal framework for the digital som.

This legislation outlines the future CBDC launch framework. Meanwhile, the National Bank of the Kyrgyz Republic was appointed to manage this digital currency platform as its sole operator.

Testing to Begin as Final Decision Awaits in 2026

The newly passed law establishes the digital som as legal tender across Kyrgyzstan when it becomes operational. The National Bank will create payment rules for its digital platform while establishing cryptographic security measures to safeguard users from fraudulent activities.

According to a Trend News Agency, a local news agency, the digital som prototype testing phase will start this year. Meanwhile, the final decision regarding CBDC issuance is scheduled for 2026. The measured approach demonstrates the multiple factors that must be considered when introducing a national digital currency.

The CBDC initiative emerges during an expansion of blockchain technology adoption throughout Kyrgyzstan. Moreover, Changpeng Zhao will sign a memorandum with the nations foreign investment agency to provide blockchain and crypto regulation advice this month.

President Zhaparov supports these initiatives because they would help economic growth and strengthen virtual asset security. The mountainous and landlocked nature of Kyrgyzstan creates favorable conditions for crypto development, especially in mining operations.

Renewable energy resources in the country are abundant because hydroelectric power plants produce more than 30% of the national energy output. The current reports indicate Kyrgyzstan has exploited less than 10% of its available hydropower resources.

The digital som CBDC of Kyrgyzstan would become one of five operational central bank digital currencies globally after the Bahamas Sand Dollar and Nigeria‘s e-Naira and Zimbabwe’s ZiG, and Jamaicas JAM-DEX. Worldwide, there are more than 90 CBDC projects that exist in research and development stages.