Kyrgyzstan’s financial authorities have registered a new stablecoin, USDKG, which has the full support of the former Soviet state.
The Central Asian country is already home to the largest non-dollar stablecoin on the market, the Russian ruble-denominated A7A5.
The latest fiat-linked cryptocurrencies issued there will be tied to greenbacks and backed by precious metal reserves.
USDKG will be issued in Kyrgyzstan within a few days
Kyrgyzstan's Ministry of Finance has announced the upcoming launch of USDKG, touted as the world's first state-owned stablecoin fully backed by physical gold.
The country's National Financial Market Regulation and Supervision Authority, the watchdog that oversees the non-bank sector of the country's financial sector, announced that the new virtual currency has been officially registered.
The digital currency is pegged to the US dollar at a 1:1 ratio and is backed by gold reserves controlled by the Kyrgyz state, Trend reported on Thursday, citing the Ministry of Finance in Bishkek. Azerbaijan News Agency, which reports on current events in the Caucasus and Central Asia, further detailed the following:
“Initial issuance and listing on centralized and decentralized exchanges is expected to take place within the next few days, with details on volumes, mechanisms and timing to be communicated separately.”
Once implemented, USDKG will function as a financial instrument that combines the proven reliability of precious metals with the transparency of blockchain systems, the Ministry of Finance stressed.
The stablecoin project is part of a pilot program carried out to develop Kyrgyzstan's digital economy and strengthen its financial sovereignty.
Plans to introduce an asset-backed currency, also known as a “gold dollar,” were unveiled in May, with Kyrgyz authorities saying it would be introduced in the third quarter of 2025.
At the time, the project's advisors revealed that it would start with $500 million worth of gold in reserve and intend to eventually grow its reserves to $2 billion, Cryptopolitan reported.
In this week's announcement, the Ministry of Finance noted the growing international interest in USDKG and shared the hope that the coin will attract investment and strengthen Kyrgyzstan's ambitions to become a hub for financial innovation.
The ministry clarified that USDKG is not affiliated with 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 Technology.
Kyrgyzstan becomes a stablecoin hotspot
Officials also pointed out that unlike other stablecoins that are linked to either gold or fiat currencies, USDKG relies on both. Trend details:
“We aim to stabilize the dollar, supported by government-approved tangible assets.”
Kyrgyz authorities believe a state-backed cryptocurrency will make it easier to send money. Many people in this country rely on remittances from family members working overseas. They hope it will also help boost trade.
Another Kyrgyzstan-based stablecoin, already used for a similar purpose, is A7A5, pegged to the ruble. Created by a Russian company and backed by deposits in Russian banks, this cryptocurrency is actually issued by an entity registered in Kyrgyzstan.
The coin has been widely adopted for cross-border transactions, contributing to Russia being ranked number one in Chainalysis' latest European Cryptocurrency Adoption Report.
With a market capitalization of approximately $500 million, it already accounts for about half of the total value of all non-dollar stablecoins.
Organizations associated with A7A5 are subject to Western sanctions because the weapon is suspected of being used by Russia to circumvent international financial regulations imposed over the Ukraine war.
The cryptocurrency, which Russia officially recognizes as a digital financial asset, has been a headache for Bishkek as Kyrgyzstan banks and crypto platforms were also included in the sanctions.
