Kyrgyzstan set to launch its own digital currency by 2027

The National Bank of Kyrgyzstan has proposed amendments to the law to ensure the use of digital currency as legal tender.

The Kyrgyz National Bank has opened public discussions on a constitutional amendment aimed at integrating its own digital currency, known as the digital som, into the country’s financial system, marking a major step towards a digital economy.

Under the proposed changes published on August 8, the digital som would be integrated into the financial system through a “special software system” managed by the central bank. The draft does not include terms such as “blockchain” or “distributed ledger,” but does mention “smart contracts,” leaving the technical details of the platform somewhat vague.

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

Central bank controls encryption keys

The digital som platform will itself provide transactions and interaction between its operator, participants and users. The rules of the platform, which will be published by the National Bank, will define the roles and responsibilities of each participant, the conditions of access and the types of transactions allowed.

In terms of governance, the draft states that the central bank, as the platform operator, will oversee the issuance and accounting of digital soms, as well as ensure the operation and security measures of the platform, including data encryption and authentication mechanisms.

It is stated that the system supports both online and offline transactions, offline payments allow users to make transfers even when there is no internet connection, and transactions are recorded on the device and then synchronized with the platform.

The digital currency is expected to be fully integrated into the country’s financial ecosystem by January 2027, providing a legal framework suitable for the rapid evolution of digital currencies internationally.