Kyrgyzstan has enacted a law to launch a pilot project for the digital som, granting it legal tender status. The National Bank will manage its issuance and security, though official rollout decision is expected by 2026. Former Binance CEO CZ Zhao is set to advise on crypto regulations, reflecting Kyrgyzstan’s growing engagement in the sector.
Kyrgyzstan’s President, Sadyr Zhaparov, has enacted a constitutional law that initiates a pilot project for a central bank digital currency (CBDC), granting the digital som, the national currency in digital form, legal tender status. The National Bank of the Kyrgyz Republic has been designated the sole authority to issue, regulate, and manage the digital som’s platform, as communicated by the presidential office on April 17.
However, a definitive decision on the official issuance of the CBDC is anticipated only by the end of 2026, according to Trend News Agency. Should the central bank proceed with adopting the digital som, they must establish cryptographic measures to secure transactions and prevent fraud. The testing phase for the digital som platform is scheduled for this year.
Zhaparov’s endorsement of this initiative follows the adoption of constitutional amendments by Kyrgyzstan’s parliament, the Jogorku Kenesh, on March 18. Central bank digital currencies have faced criticism within the cryptocurrency community concerning potential risks to financial privacy and excessive governmental oversight.
While 115 nations have initiated CBDC projects, only four have launched: the Bahamas Sand Dollar, Nigeria’s e-Naira, Zimbabwe’s ZiG, and Jamaica’s JAM-DEX. Furthermore, over 90 projects remain in the research phase, according to data from CBDC tracker.
Additionally, this month, former Binance CEO Changpeng “CZ” Zhao has agreed to advise Kyrgyzstan on blockchain and crypto regulation after signing a memorandum with the country’s foreign investment agency. Zhaparov stated this initiative would enhance economic growth and the security of digital assets, creating new opportunities for businesses and society.
Kyrgyzstan is recognized for its favorable conditions for cryptocurrency mining, attributed to its abundant but underutilized renewable energy resources. Over 30% of the nation’s energy supply is derived from hydroelectric power, though only 10% of its hydropower potential is currently exploited, per the International Energy Agency’s report.
In summary, Kyrgyzstan’s recent legal framework for the digital som marks a significant step towards the adoption of a central bank digital currency, although the official issuance is pending until at least 2026. The National Bank will oversee its operation while ensuring security against fraud. Furthermore, the involvement of prominent figures in crypto regulation signals promising developments for Kyrgyzstan’s economy and crypto mining potential, leveraging its renewable energy resources effectively.
Original Source: cointelegraph.com
