🌎 Kyrgyzstan Moves to Legalize Digital Currency as Legal Tender

Kyrgyzstan’s central bank has proposed amendments to legalize its digital currency as legal tender. The National Bank of Kyrgyzstan has initiated public discussions on constitutional law amendments aimed at integrating its own digital currency, known as digital som, into the nation’s financial system. This move represents a significant step toward a digitized economy.

Under the proposed amendments published on August 8, the digital som will be integrated into the financial system through a specialized software system managed by the central bank. Although the draft does not include terms like “blockchain” or “distributed ledger,” it does mention “smart contracts,” leaving the technical details of the platform somewhat unclear.

The design of the system includes the introduction of “digital accounts” and “digital wallets.” Digital accounts will be specialized accounts managed by the platform operator for participants, while digital wallets will be available to individual users for transactions. These wallets can be accessed via applications provided by banks and other financial institutions participating in the platform.

The digital som platform will enable transactions and interactions among its operator, participants, and users. The National Bank will issue the platform’s rules, defining roles and responsibilities of each participant, access conditions, and types of transactions permitted.

In terms of governance, the central bank, as the platform operator, will oversee the issuance and accounting of digital soms. It will also ensure the platform’s operation and security measures, including data encryption and authentication mechanisms.

The system will support both online and offline transactions. Offline payments will allow users to conduct transfers even without an internet connection, with transactions recorded on the device and synchronized with the platform later.

The digital currency is expected to be fully integrated into the country’s financial ecosystem by January 2027. This legal framework aligns with the rapid evolution of digital currencies on the international level.