Kyrgyzstan President Signs Law Launching Digital Som CBDC Pilot Project

Kyrgyzstan President Sadyr Zhaparov has signed a constitutional law authorizing the launch of a central bank digital currency pilot project while also giving the “digital som” — the national currency in digital form — legal tender status.

Kyrgyzstan President Sadyr Zhaparov has signed a constitutional law launching a central bank digital currency pilot project and giving the “digital som”—the national currency in digital form—legal tender status.

The law, which was passed by the Jogorku Kenesh, or Kyrgyzstan's parliament, grants the National Bank of the Kyrgyz Republic the exclusive right to issue the digital som, set the rules for its issuance and circulation, and manage the platform on which the national currency will operate, Zhaparov’s office said on Monday.

A final decision on whether to officially introduce the CBDC is not expected until the end of 2026, local outlet Trend News Agency reported in December.

If the central bank decides to adopt the digital som, it would also need to define the cryptographic protection measures to ensure the digital som remains invulnerable and isn’t used for fraudulent transactions.

Testing of the digital som platform is expected to take place sometime this year.

Zhaparov’s sign-off comes nearly a month after the Jogorku Kenesh approved the amendment to Kyrgyzstan’s constitutional law on March 18.

The move comes as countries around the world step up their efforts to launch their own CBDCs.

Despite the huge interest in the technology, which is touted to revolutionize the financial industry, only a handful of countries have managed to fully launch their digital currencies.

According to data from cbdctracker.org, 115 nations have started projects to introduce a CBDC, but only four have officially launched their own tokens.

The first was the Bahamas, which launched its Sand Dollar in October 2020, while Nigeria followed with the e-Naira in October 2021.

Zimbabwe and Jamaica both launched their JAM-DEX and ZiG tokens earlier this year.

More than 90 other countries' projects are yet to progress past the research phase.

Kyrgyzstan continues to make moves in crypto

Earlier this month, former Binance CEO Changpeng "CZ" Zhao said he would begin advising Kyrgyzstan on blockchain and crypto-related regulation after signing a memorandum of understanding with the country’s foreign investment agency.

Zhaparov said the initiative would assist with the growth of the economy and the security of virtual assets, “generating new opportunities for businesses and society as a whole.”

The move comes after the Binance CEO met with the president of Kyrgyzstan in January to discuss ways to cooperate in developing the digital economy.

The mountainous, land-locked country is considered well-suited for crypto mining operations due to its abundant renewable energy resources, much of which is underutilized.

Over 30% of Kyrgyzstan’s total energy supply comes from hydroelectric power plants, but only 10% of the country’s potential hydropower has been tapped, according to a report by the International Energy Agency.