Kyrgyzstan has officially authorized the development of a central bank digital currency (CBDC) following the passage of new legislation signed by President Sadyr Zhaparov, granting legal tender status to a future “digital som.”

The constitutional law, signed April 17, gives the National Bank of the Kyrgyz Republic the sole authority to issue and regulate a digital version of the national currency.

It also empowers the central bank to manage the platform that would support its circulation and ensure operational oversight.

Under review until 2026

Although the legal groundwork has been laid, Kyrgyz officials have not yet committed to a full-scale launch. A decision on whether to implement the digital som is expected by late 2026.

In the meantime, the central bank is preparing to initiate testing of the system later this year.

Should the digital currency move forward, Kyrgyz authorities will be required to introduce safeguards, including encryption protocols, to prevent misuse and ensure transaction integrity.

Kyrgyzstan now joins more than 100 countries exploring CBDCs, though only a handful, including the Bahamas, Nigeria, Zimbabwe, and Jamaica, have officially launched state-backed digital currencies, according to public data on global CBDC development.

Strategic push

The move follows a series of digital asset initiatives in Kyrgyzstan. Earlier in April, the country signed a cooperation agreement with former Binance CEO Changpeng Zhao, who will advise officials on blockchain regulation and crypto-sector growth.

President Zhaparov described the partnership as a step toward boosting economic resilience and expanding digital opportunities.

Kyrgyzstan also has unique appeal for crypto-related infrastructure due to its abundant hydroelectric capacity. While over 30% of the country’s energy already comes from hydropower, the International Energy Agency estimates that much of this potential remains untapped, a factor that could support energy-intensive blockchain operations in the future.

Despite growing interest from governments, CBDCs remain controversial among privacy advocates who warn of risks related to surveillance and centralized control. Kyrgyz officials maintain that any digital currency framework will prioritize financial stability, innovation, and long-term benefits for both businesses and citizens.

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Kyrgyzstan President Sadyr Japarov took his country a step closer to issuing its own central bank digital currency Thursday, signing legislation that gives the “digital som” legal status.

The central Asian country is still deciding whether or not to issue a CBDC, but Thursday’s amendments to the Constitutional Law of the Kyrgyz Republic ensures that the digital som will be treated as legal tender if the central bank goes ahead with issuing a CBDC.

“The purpose of the Constitutional Law is to launch a pilot project of a prototype of a national digital currency, the ‘digital som,’ as well as to create a legal basis and its status,” a statement on the president’s site said.

Under the new provisions, the National Bank of the Kyrgyz Republic will be able to develop and approve rules for conducting payments on the digital som platform.

These provisions, described as amendments on the president’s website, were first adopted on March 20 by Kyrgyzstan’s supreme council. The country is due to begin testing the digital som this year, according to local news outlet Trend News Agency. The country is not expected to make a final decision on whether to issue the CBDC until next year.

The idea of CBDCs has been controversial among some crypto proponents, but countries like the U.K., Nigeria, Jamaica and the Bahamas — as well as the European Union’s multinational bloc — have moved in the direction of issuing a CBDC, while other countries like the U.S. have largely moved away from the idea of issuing one.

Binance founder Changpeng ‘CZ’ Zhao has signed a memorandum of understanding (MoU) with the Kyrgyz Republic’s National Investment Agency (NIA). The main objective behind the latest strategic partnership is to develop the country’s cryptocurrency and blockchain ecosystem.

The agreement, which was announced on April 3 by Kyrgyz President Sadyr Zhaparov, outlines plans for collaboration in regulatory consulting, infrastructure development, and education initiatives.

Backing Kyrgyz Crypto Efforts

According to the official statement, the partnership will focus on strengthening Kyrgyzstan’s technological infrastructure, improving digital asset security, and supporting the training of local specialists in blockchain, cybersecurity, and virtual asset management.

CZ confirmed the partnership in a post on X, while stating that he advises multiple governments – both formally and informally – on blockchain frameworks and their potential applications beyond trading.

“I officially and unofficially advise a few governments on their crypto regulatory frameworks and blockchain solutions for gov efficiency, expanding blockchain to more than trading. I find this work extremely meaningful.”

Meanwhile, the NIA operates under the President of Kyrgyzstan and is responsible for attracting foreign investment and supporting international businesses. Officials said the collaboration with the former Binance chief is intended to position Kyrgyzstan as a forward-looking digital economy and a potential leader in blockchain innovation in Central Asia.

Zhaparov said that this initiative opens “new horizons” for the development of digital technologies and will contribute to the sustainable growth of Kyrgyzstan’s economy.

CZ’s Role

The MoU includes provisions for technical support, professional consulting services, and the launch of educational programs to raise awareness and expertise in blockchain-related fields. As the global digital landscape continues to evolve, Kyrgyz authorities are positioning the country to participate more actively in the digital economy and attract emerging tech investments.

CZ’s involvement follows his departure from Binance in late 2023. Earlier, he pleaded guilty to a money laundering charge in the United States and was sentenced in April 2024 to four months in prison, which he completed by September. The 48-year-old former exec then shifted his focus toward broader industry engagement and advisory roles.

No timeline has been announced yet for the rollout of specific initiatives under the agreement, but both parties have indicated that work will begin in the coming months.