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Kyrgyzstan’s central bank has proposed amendments to the law to legalize its digital currency as a legal tender. The National Bank of Kyrgyzstan has initiated public discussions on constitutional law amendments aimed at integrating its own digital currency — known as digital som — into the nation’s financial system, marking a big step toward a digitized economy. Under the proposed amendments published on Aug. 8, the digital som will be integrated into the financial system through a “specialized software system” managed by the central bank. The draft does not contain terms like “blockchain” or “distributed ledger,” though it does mention “smart contracts,” leaving the technical details of the platform somewhat unclear. The system’s design 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 via applications provided by banks and other financial institutions participating in the platform. Central bank controls encryption keys The digital som platform itself will enable transactions and interaction among its operator, participants, and users. The platform’s rules, which will be issued by the National Bank, will define the roles and responsibilities of each participant, access conditions, and the types of transactions permitted. In terms of governance, the central bank, as the platform operator, will oversee the issuance and accounting of digital soms as well as ensuring the platform’s operation and security measures, including data encryption and authentication mechanisms, the draft reads. The system is said to be supporting both online and offline transactions, with offline payments allowing users to conduct transfers even in the absence of an internet connection, with transactions recorded on the device and later synchronized with the platform. The digital currency is expected to be…

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Filed under: News - @ August 10, 2024 7:16 pm