Kyrgyzstan Moves Closer to Launching Digital Som, Its Future National Virtual Currency

Kyrgyzstan’s Parliament has approved a draft law outlining the framework for the digital som, the country’s central bank digital currency (CBDC), in its first reading. The National Bank of Kyrgyzstan, responsible for overseeing the issuance and operation of the digital som, plans to launch prototype testing in early 2025.

Following successful trials, a decision on full implementation is expected by the end of 2026. 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.

Key Features of the Digital Som Platform

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

Tips for understanding the digital som platform:

  • Online transactions will be processed in real-time.
  • Offline transactions will be stored locally and synchronized with the platform when internet access is restored.
  • The platform will manage distribution, accounting, and security of the digital som.

Addressing Challenges and Concerns

However, it remains unclear how the National Bank of Kyrgyzstan intends to address the challenges of implementing offline functionality, a feature that has raised feasibility concerns among several central banks globally.

Integration into Kyrgyzstan’s Financial Ecosystem

In August, the National Bank began public discussions on constitutional amendments to support the integration of the 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 draft law avoids explicit mention of distributed ledger technology. Instead, it incorporates smart contracts and emphasizes centralized management under the National Bank. The digital som is slated for full integration into Kyrgyzstan’s financial ecosystem by January 2027.

Stay up-to-date with the latest news on central bank digital currencies and other cryptocurrency topics on Global Crypto News.

Post Views: 0