Kyrgyzstan’s Digital Som Receives Legal Status as President Signs CBDC Law
Kyrgyzstan’s President Sadyr Zhaparov has enacted a law granting legal status to the digital som, paving the way for a CBDC pilot project. The National Bank will regulate its issuance and circulation. Testing is anticipated to begin this year, though full implementation is on hold until 2026. Former Binance CEO Zhao will advise on blockchain regulation, promoting economic growth.
President Sadyr Zhaparov of Kyrgyzstan has signed a constitutional law which provides legal status to a central bank digital currency (CBDC) pilot project. This legislation also designates the “digital som,” the digital version of the national currency, as legal tender. The law empowers the National Bank of the Kyrgyz Republic with the sole authority to issue the digital som and regulate its circulation and operational platform.
The decision to officially launch the CBDC is anticipated at the end of 2026, as reported by Trend News Agency in December. Should the central bank proceed with the digital som, it must implement cryptographic measures to secure the currency and prevent fraud. Testing of the digital som platform is scheduled to occur within this year.
Zhaparov’s endorsement follows the Kyrgyz parliament’s approval of the constitutional amendment on March 18. While central bank digital currencies are gaining traction globally, they face skepticism within the crypto community due to concerns regarding privacy and government oversight. Data shows that among 115 nations pursuing CBDC initiatives, only four have successfully launched their projects.
In a related development, former Binance CEO Changpeng “CZ” Zhao has offered his expertise to Kyrgyzstan regarding blockchain and crypto regulation, having formalized this collaboration with the country’s foreign investment agency. Zhaparov highlighted that this initiative aims to bolster economic growth and enhance the security of digital assets, thus creating new prospects for businesses and society.
Kyrgyzstan, rich in renewable energy resources conducive to crypto mining, has yet to fully utilize its hydropower potential, with only 10% currently tapped from a supply that largely derives from hydroelectric plants. This situation presents a significant opportunity for developing the crypto mining sector in the country.
The recent signing of the CBDC law by President Zhaparov positions Kyrgyzstan on the path to potentially launching its digital som as legal tender by 2026. This initiative reflects a growing global interest in CBDCs, amidst both opportunities and criticisms regarding privacy and regulatory oversight. With renewed focus on crypto regulation and mining potential, Kyrgyzstan aims to foster economic growth through innovative financial solutions.
Original Source: cointelegraph.com
