Kyrgyzstan is inching toward launching its own digital currency at the central bank after President Sadyr Zhaparov signed legislation granting the digital som legal tender status.

The signed amendments to Kyrgyzstan's constitutional law empower the National Bank of the Kyrgyz Republic to issue Central Bank Digital Currency (CBDC), the digital som, define its usage rules, and oversee the platform on which it will operate.

While the law does not confirm a full-scale launch, it formalizes the digital som's legal standing and allows pilot testing to proceed later this year.

Legal Framework Now in Place

According to the president's office, the law aims to "launch a pilot project of a prototype of a national digital currency" and to create the conditions necessary for its legal and technical development.

Kyrgyzstan's parliament reportedly passed the legislation in March before the president's final approval on April 17. With this law in place, the central bank gains exclusive control over issuing the digital som and must establish measures to secure the currency against fraud and misuse.

However, a final decision on full implementation isn't expected until the end of 2026, giving the country time to assess outcomes from its pilot.

The country plans to begin testing the digital som platform this year. The National Bank will lead the trial phase, which is intended to evaluate the system's performance and security before committing to a nationwide rollout.

Kyrgyzstan joins a growing list of countries exploring digital currencies. While more than 100 nations have initiated CBDC projects, only a few, including the Bahamas, Nigeria, Zimbabwe, and Jamaica, have gone live with a digital currency.

The CBDC effort comes as Kyrgyzstan positions itself more broadly in the digital finance space. Earlier this month, former Binance CEO Changpeng Zhao signed an agreement to advise the country on blockchain policy.

Regional Context and Global Debate

President Zhaparov said the initiative could enhance economic development and virtual asset security, creating new business opportunities.

Kyrgyzstan also benefits from favorable conditions for crypto mining, including abundant and underutilized hydropower resources. The International Energy Agency notes that while hydropower supplies over 30% of the country's energy, only a fraction of its full potential is currently in use.

Kyrgyzstan's cautious approach contrasts with that of countries like the U.S., which has largely avoided active CBDC development.

Source: Finance Magnates