The Ministry of Finance of Kyrgyzstan plans to issue a state-backed stablecoin in Q3 2025. The asset’s price will be pegged to the U.S. dollar and backed by part of the country’s gold reserves.
Kyrgyzstan is set to introduce the stablecoin USDKG, with a 1:1 peg to the U.S. dollar. The asset will be backed by gold held by the Ministry of Finance. At launch, the reserves will total $500 million, with plans to increase this to $2 billion over time. Gabriel Guerra, Advisor and Co-Lead of the Gold Dollar project, shared the details with CoinDesk at the Token2049 conference in Dubai.
USDKG is designed for cross-border transactions and international trade. Initially, it’ll target Central Asia, with plans to expand into Southeast Asia and the Middle East. To minimize the impact of underlying asset volatility on USDKG’s price, the project will use overcollateralization. Transparency will be ensured through independent auditors.
Notably, unlike XAUT or PAXG, USDKG isn’t meant to track the price of gold. The metal will serve solely as a financial reserve. Holders of USDKG will have the option to exchange their tokens for physical gold, other crypto-assets, or withdraw them in fiat currency.
The first mention of USDKG’s launch plans appeared about a month ago during an AMA session with representatives of Kyrgyzstan’s Ministry of Finance. At the time, officials stated that the asset was intended as an alternative to a central bank digital currency (CBDC), which was recognized as legal tender in the country at the end of April 2024.
