Uzbekistan has launched a pilot programme to use HUMO, a stablecoin pegged to the country’s currency, the som (UZS), for payments for goods and services. It is testing a stablecoin backed by government securities in a regulatory sandbox to assess the potential to expand digital payment infrastructure.

Cointelegraph reported on Sept. 8 that Uzbekistan’s National Agency for Perspective Projects (NAPP), with approval from the central bank, registered HUMO Digital as a participant in a special legal regime. The pilot will test HUMO’s issuance, circulation and redemption, as well as payments at participating merchants.

Each HUMO is pegged to the value of 1 Uzbek som and is issued with government securities as collateral. More than 20 merchants are expected to take part in payment tests for goods and services. The project will also connect banks’ payment and processing systems with blockchain infrastructure. Asterium, which holds licences related to cryptocurrency exchange and custody and sales, is participating as a project partner.

The initial test period is 12 months. It can be extended if needed, but the overall project period is capped at a maximum of 3 years. Authorities will examine whether government bond collateral is sufficiently secured and preserved, and will check transaction transparency, cybersecurity, consumer protection and anti-money laundering systems. The central bank will also assess the impact on monetary policy and on financial and price stability.

The project is based on a fintech promotion policy approved in November last year and special rules for stable tokens prepared in April. After the pilot ends, authorities plan to assess the practical applicability and risks of government securities-backed stablecoins and reflect the results in improvements to digital finance regulation.

Uzbekistan’s experiment is drawing attention in that it tests a payment model combining the national currency and government bonds in a market where dollar-pegged stablecoins are mainstream. For now, it remains a regulatory test in a limited environment, and nationwide commercialisation has not yet been decided.