Kyrgyzstan President Authorizes Legal Status for Central Bank Digital Currency

Kyrgyzstan’s President has signed a law granting legal status to the digital som, allowing the National Bank to issue the CBDC. The final issuance decision is due by 2026, while initial testing will occur this year. Concerns about CBDCs persist, but Kyrgyzstan is moving forward in the crypto sector, with advisory support from blockchain experts.

On April 17, Kyrgyzstan’s President Sadyr Zhaparov enacted a constitutional law establishing the legal status of the central bank digital currency (CBDC), termed the “digital som.” This law empowers the National Bank of the Kyrgyz Republic with exclusive rights to issue the digital som, oversee its related laws, and manage the operational platform for the digital currency.

Despite this advance, the final decision regarding the official issuance of the CBDC is not projected until late 2026, as reported by Trend News Agency. Should the central bank proceed, it must develop cryptographic protections to safeguard the digital som from fraud. Initial testing of the digital som platform is anticipated within this year.

The signing of this law follows a parliamentary approval on March 18, emphasizing Kyrgyzstan’s progression towards integrating CBDCs. Nonetheless, some in the cryptocurrency community have raised concerns over potential violations of financial privacy and enhanced governmental control that may accompany such digital currencies.

Currently, 115 nations are involved in CBDC initiatives, yet only four have officially launched their digital currencies. Notably, Kyrgyzstan is also enhancing its crypto landscape, with former Binance CEO Changpeng Zhao joining efforts to advise on blockchain and crypto regulation. This initiative aims to bolster economic growth and enhance security in virtual assets, presenting new prospects for businesses and society alike.

In summary, Kyrgyzstan’s recent law legitimizing the digital som marks a significant step towards central bank digital currencies, with exclusive rights granted to its National Bank for issuance and regulation. While testing is set to commence soon, the full implementation is expected by late 2026, amidst ongoing discussions surrounding the implications of CBDCs. The engagement of experienced leaders in crypto regulation illustrates Kyrgyzstan’s ambition to enhance its economic framework and capitalize on its energy resources for cryptocurrency mining.

Original Source: cointelegraph.com