Kyrgyzstan President Sadyr Zhaparov Signs Landmark CBDC Law for Digital Som

Kyrgyzstan is ramping up its engagement with the global crypto sector, recently securing a strategic partnership with former Binance CEO Changpeng “CZ” Zhao. Under a new memorandum signed with the country’s foreign investment agency, Zhao will serve as an advisor on blockchain innovation and digital asset policy.

President Sadyr Zhaparov welcomed the move, describing it as a catalyst for economic modernization and digital resilience. He emphasized that advancing blockchain frameworks could unlock fresh business opportunities and promote safer, more inclusive financial systems nationwide.

The newly signed law empowers the NBKR with exclusive rights to issue the digital som, oversee its distribution, and develop regulations governing its use. This legislative action follows the Kyrgyz Parliament's approval of the amendment on March 18, 2025, marking a pivotal step in the nation's exploration of digital currency solutions.

The primary objective of this legal framework is to initiate a pilot project for the digital som, establishing its status as legal tender within Kyrgyzstan. The NBKR is tasked with developing and approving rules for conducting payments on the digital som platform, ensuring a secure and efficient payment system.

Prototype testing of the digital som is scheduled to commence in early 2025. Following successful trials, a decision on full implementation is anticipated by the end of 2026, with the goal of integrating the digital som into Kyrgyzstan's financial ecosystem by January 2027.

Distinct from many global CBDC initiatives that rely heavily on blockchain technology, Kyrgyzstan's approach emphasizes centralized management under the NBKR. While the system will incorporate features like smart contracts, it avoids explicit reliance on blockchain, tailoring the digital som to the country's specific financial and technological landscape.

A notable feature of the digital som is its capability to support both online and offline transactions. This functionality is particularly significant for Kyrgyzstan, where internet access can be inconsistent, especially in remote areas. Offline transactions will be stored locally on user devices and synchronized with the central platform once connectivity is restored, ensuring accessibility for all citizens.

The introduction of the digital som aims to enhance financial inclusion across Kyrgyzstan, providing secure and efficient payment options for all citizens. The NBKR will oversee the issuance, accounting, and distribution of the digital currency through a centralized platform, granting the central bank exclusive rights to issue the currency.

Kyrgyzstan's move aligns with a broader global trend toward digital currencies. According to the Atlantic Council, 134 countries, representing 98% of the global economy, are currently exploring or developing their own CBDCs, a significant increase from just 35 countries in 2020.

While the digital som's implementation is still in the exploratory phase, the establishment of its legal status marks a significant milestone in Kyrgyzstan's journey toward a digital financial future. The upcoming pilot project and subsequent evaluations will determine the feasibility and readiness of the digital som for full-scale integration into the nation's economy.​

As Kyrgyzstan embarks on this ambitious endeavor, the success of the digital som could serve as a model for other nations considering similar digital currency initiatives, particularly those seeking to enhance financial inclusion and modernize their payment systems without relying solely on blockchain technology.