Kyrgyzstan’s central bank has proposed legal changes to legalize the digital currency as legal tender.
The National Bank of Kyrgyzstan has initiated public discussions on changes to constitutional law aimed at integrating its own digital currency – known as digital sum – into the country’s financial system, marking a major step towards a digitalized economy.
Under the proposed amendments published on August 8, the digital sum will be integrated into the financial system through a “special software system” managed by the central bank. The concept does not include terms such as ‘blockchain’ or ‘distributed ledger’, although it does mention ‘smart contracts’, leaving the technical details of the platform somewhat unclear.
The design of the system includes the introduction of ‘digital accounts’ and ‘digital wallets’. While digital accounts will be specialized accounts managed by the platform operator for participants, digital wallets will be available to individual users for transactions. These wallets can be accessed through applications of banks and other financial institutions participating in the platform.
The central bank controls encryption keys
The digital sum platform itself will enable transactions and interaction between the operator, participants and users. The rules of the platform, which will be issued 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 central bank, as platform operator, will oversee the issuance and accounting of digital documents and will ensure the platform’s operation and security measures, including data encryption and authentication mechanisms, the draft said.
The system is said to support both online and offline transactions, with offline payments allowing users to make transfers even when there is no internet connection, with transactions recorded on the device and later synced to the platform.
The digital currency is expected to be fully integrated into the country’s financial ecosystem by January 2027, creating a legal framework in line with the rapid development of digital currencies internationally.