Kyrgyzstan is moving forward with its central bank digital currency (CBDC), the digital som, as Parliament has approved a draft law establishing its legal framework.
The National Bank of Kyrgyzstan will oversee the project, with prototype testing set to begin in early 2025 and a decision on full implementation anticipated by late 2026.
According to a report by an Azerbaijani media outlet, the digital software, once adopted, will serve as an official legal tender issued exclusively by the central bank through a dedicated platform to manage its distribution, accounting, and security. This platform supports online and offline transactions, allowing users in remote areas to process payments even without internet access. Offline transactions will be stored locally and synchronized later. However, there are concerns regarding the technical feasibility of the offline functionality, as similar attempts have faced challenges globally.
In preparation for the digital currency, the National Bank began public discussions in August to explore potential constitutional amendments and gather feedback. The proposed system will allow individuals to access digital wallets through banking apps and financial institutions, enhancing the existing financial ecosystem. Unlike many Central Bank Digital Currency (CBDC) initiatives that rely heavily on blockchain technology, Kyrgyzstan’s digital som focuses on centralized management by the National Bank, integrating smart contracts into its framework. Full integration into the national economy is expected by January 2027.
Notably, Circle Internet Financial, the issuer of USD Coin (USDC), emphasized USDC’s key role in Asia’s financial ecosystem in its latest report. Since its launch in 2018, USDC has facilitated over $12 trillion in blockchain transactions, with Asia being a crucial market. In 2022, over $130 billion in USDC remittances flowed into Asia. The Asia-Pacific region now represents 29% of the global digital asset value, outpacing North America’s 19% and Western Europe’s 22%, highlighting its leadership in digital asset adoption and usage.
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