The digital som, Kyrgyzstan’s future national virtual currency, moved closer to reality with parliamentary approval of a draft law outlining its framework.

Kyrgyzstan’s Parliament has approved a draft law defining the status and legal framework for the digital som, the country’s central bank digital currency, in its first reading, Azerbaijani media outlet Trend reports.

The National Bank of Kyrgyzstan, which will oversee the issuance and operation of the digital som, plans to launch prototype testing in early 2025. Following successful trials, a decision on full implementation is expected by the end of 2026, the report reads. Once adopted, the digital som will serve as legal tender, issued only by the central bank through a specialized platform that manages its distribution, accounting, and security.

It’s understood that the digital som platform is designed to support both online and offline transactions, ensuring accessibility even in areas with limited internet connectivity. Offline transactions will be stored locally on devices and synchronized with the platform once internet access is restored.

However, it remains unclear how the National Bank of Kyrgyzstan intends to address the challenges of implementing offline functionality, a feature that has raised feasibility concerns among several central banks globally.

In August, the National Bank began public discussions on constitutional amendments to support the integration of the digital currency. The proposed system includes digital accounts for platform participants and digital wallets for individual users, accessible through banking apps and other financial institutions.

Unlike many central bank digital currency initiatives that emphasize blockchain, Kyrgyzstan’s draft law avoids explicit mention of distributed ledger technology. Instead, it incorporates smart contracts and emphasizes centralized management under the National Bank. The digital som is slated for full integration into Kyrgyzstan’s financial ecosystem by January 2027.