Financial authorities in Kyrgyzstan have registered a new stablecoin, USDKG, which enjoys the full support of the state in the former Soviet republic.
The Central Asian nation is already home to the largest non-dollar stablecoin on the market, the Russian ruble-denominated A7A5.
And the latest fiat-linked cryptocurrency to be issued there will be tied to the Greenback and underpinned with stockpiles of precious metal.
USDKG to be issued in Kyrgyzstan within days
Kyrgyzstan’s Ministry of Finance announced the upcoming launch of USDKG, touted as the world’s first state-sponsored stablecoin that’s fully backed by physical gold.
It said the new crypto has been officially registered by the State Service for Regulation and Supervision of Financial Markets, the watchdog overseeing the non-bank segment of the country’s financial sector.
The digital currency is pegged to the U.S. dollar at a 1:1 ratio and supported by gold reserves controlled by the Kyrgyz state, Trend reported on Thursday, quoting the Treasury in Bishkek. The Azerbaijani news agency, which covers current events in the Caucasus and Central Asia, further detailed:
“The initial issue and listing on centralized and decentralized exchanges are expected in the coming days, with a separate notice to provide details on volume, mechanism, and timing.”
Once introduced, USDKG will serve as a financial instrument combining the time-tested reliability of the precious metal with the transparency of blockchain systems, the finance ministry highlighted.
The stablecoin project is part of a pilot program implemented to develop Kyrgyzstan’s digital economy and strengthen its financial sovereignty.
The plan to launch the asset-backed currency, also called “Gold Dollar,” was unveiled in May, when Kyrgyz authorities said it will appear in the third quarter of 2025.
At the time, an advisor to the project revealed it would start with $500 million worth of gold in store, with intentions to ultimately increase the reserves to $2 billion, as reported by Cryptopolitan.
In this week’s announcement, the Ministry of Finance noted the growing international interest in USDKG and shared its expectations that the coin will bolster Kyrgyzstan’s ambition to become a hub for financial innovation, attracting investments.
The department clarified that USDKG is not related to the digital som (KGST). The central bank digital currency (CBDC) project is still under discussion at the National Council for the Development of Virtual Assets and Blockchain Technologies.
Kyrgyzstan becomes a stablecoin hotspot
Officials also pointed out that, unlike other stablecoins that are linked to either gold or fiat money, USDKG relies on both. Trend elaborated:
“It’s striving for the dollar’s stability, while being underpinned by the tangible asset, all endorsed by the government.”
Kyrgyz authorities believe the state-backed crypto will facilitate remittances. Many people in the country rely on the money sent by family members working abroad. They hope it will boost trade as well.
Another Kyrgyzstan-based stablecoin, that’s already being used for similar purposes, is the ruble-pegged A7A5. Created by a Russian company and backed by deposits in a Russian bank, the cryptocurrency is actually issued by a Kyrgyz-registered entity.
The coin is widely employed in cross-border transactions, contributing to Russia’s ranking first in the latest European crypto adoption report by Chainalysis.
With a market cap of around $500 million, it already accounts for around half of the total capitalization of all non-dollar stablecoins.
For its suspected use in Russian evasion of international financial restrictions imposed over the war in Ukraine, organizations linked to A7A5 have been targeted in Western sanctions.
The crypto, which Russia officially recognized as a digital financial asset, has created headaches for Bishkek, as Kyrgyz banks and crypto platforms were also among the sanctioned entities.