Kyrgyz President Sadir Jhaparov signed a law that grants the central bank's legal status in digital currency, authorizing the launch of a digital currency pilot project and giving Digital Som, the country's legal status as a digital currency.
The law gives the Kyrgyz Republic State Bank the power to issue digital Som exclusively, formulate its issuance and circulation rules, and supervise its operating platform, the Office of the President of Kyrgyzstan said on April 17.
But the final decision on whether to formally issue CBDC is expected to be made by the end of 2026, local media Trend News Agency reported in December.
If the central bank decides to adopt the digital Somme, it also needs to develop encryption protection measures to ensure it is safe and prevent fraudulent use. The Digital Somme Platform Test is expected to be conducted some time this year.
The bill was approved almost one month after the Kyrgyz Parliament, namely Lorku Kenneth, passed the constitutional amendment on March 18.
Although CBDC has been criticized by some members of the crypto community, it points to its potential to undermine financial privacy and increase government regulation.
Currently, only four CBDCs have officially launched - Sand Dollar in the Bahamas, e-Naira in Nigeria, Zig in Zimbabwe and JAM-DEX in Jamaica.
Kyrgyzstan's further actions in the field of encryption
Earlier this month, former Binance CEO Zhao Changpeng signed a memorandum of understanding to provide advice on blockchain and crypto regulations for Kyrgyzstan.
Japarov said the plan will promote economic growth and the security of virtual assets, creating new opportunities for businesses and society.
Source: Sadir Japalov
This mountainous landlocked country is considered to be very suitable for cryptocurrency mining, as its abundant renewable energy resources are still to be developed.
According to the International Energy Agency report, more than 30% of Kyrgyzstan's energy supply is now derived from hydropower stations, but only 10% of its potential is being developed.
