Kyrgyzstan advances plans for national digital currency: report

The digital som, the future national virtual currency of Kyrgyzstan, has moved closer to reality with the parliamentary approval of a bill defining its framework.

The Parliament of Kyrgyzstan approved a draft law defining the status and legal framework of the digital som, the central bank digital currencyin first reading, Azerbaijani media Trend reports.

The National Bank of Kyrgyzstan, which will oversee the issuance and operation of the digital som, plans to launch prototype tests in early 2025. After successful trials, a decision on full implementation is expected by the end of 2026 , the report says. Once adopted, the digital som will serve as legal tender, issued only by the central bank through a specialized platform that manages its distribution, accounting and security.

It is understood that the som digital platform is designed to support online and offline transactions, ensuring accessibility even in areas with limited internet connectivity. Offline transactions will be stored locally on devices and synced to the platform once internet access is restored.

However, it remains unclear how exactly the National Bank of Kyrgyzstan plans to address the challenges of implementing offline functionality, a feature that has raised concerns about its feasibility. several central banks on a global scale.

In August, the National Bank launched public debates on constitutional amendments to support the integration of digital currency. The proposed system includes digital accounts for platform participants and digital wallets for individual users, accessible through banking apps and other financial institutions.

Unlike many central bank digital currency initiatives that emphasize blockchain, Kyrgyzstan’s bill avoids explicitly mentioning distributed ledger technology. Instead, it integrates smart contracts and emphasizes centralized management under the National Bank. The digital som is expected to be fully integrated into Kyrgyzstan’s financial ecosystem by January 2027.