Kyrgyzstan has officially recognized the “digital som” as legal tender through a new law signed by President Zhaparov. The National Bank will control its issuance, with a decision on full implementation expected by late 2026. The country is also progressing in blockchain and crypto regulations, bolstered by the potential for crypto mining due to its hydroelectric resources.
President Sadyr Zhaparov of Kyrgyzstan has enacted a constitutional law that authorizes a pilot project for a central bank digital currency (CBDC), granting the “digital som” legal tender status. This law also entrusts the National Bank of the Kyrgyz Republic with exclusive rights to issue and regulate the digital currency, as confirmed by the presidential office on April 17.
The central bank’s final decision regarding the issuance of the digital som is anticipated by the end of 2026. Should the issuance proceed, it is imperative for the bank to establish cryptographic security measures to protect against fraud and ensure safe digital transactions.
Testing of the digital som platform is scheduled for this year. The president’s approval follows the Jogorku Kenesh parliament’s endorsement of amendments to the constitutional law, which occurred on March 18.
Concerns regarding CBDCs have been voiced by certain members of the crypto community, who argue that such currencies may diminish financial privacy while facilitating government surveillance. Despite 115 countries pursuing CBDC initiatives, only four have seen their digital currencies officially launch: The Bahamas Sand Dollar, Nigeria’s e-Naira, Zimbabwe’s ZiG, and Jamaica’s JAM-DEX, according to cbdctracker.org.
Kyrgyzstan is advancing in the cryptocurrency sector. Changpeng “CZ” Zhao, the former CEO of Binance, announced he would advise Kyrgyzstan on blockchain and cryptocurrency regulations following a memorandum of understanding with the foreign investment agency. Zhaparov has stated that this initiative aims to enhance the economy and secure virtual assets, providing opportunities for businesses and society.
Kyrgyzstan, rich in renewable energy resources, is particularly suited for crypto mining operations. Reports indicate that over 30% of the nation’s energy supply is derived from hydroelectric power, although only 10% of its hydropower potential is currently utilized, as per the International Energy Agency.
Kyrgyzstan is taking significant steps toward implementing a central bank digital currency, with the digital som now recognized as legal tender. While the final issuance decision will arrive by 2026, the upcoming platform testing signals the country’s commitment to advancing its digital currency landscape. Additionally, efforts to enhance cryptocurrency regulations signify Kyrgyzstan’s proactive approach in the crypto sector, leveraging its abundant energy resources for potential mining operations.
Original Source: cointelegraph.com
