Kyrgyzstan to Launch Gold-Backed Stablecoin USDKG in Q3

Kyrgyzstan is set to debut its first gold-backed stablecoin, the Gold Dollar (USDKG), pegged 1:1 with the U.S. dollar, in the third quarter of 2025.

The USDKG will be backed by $500 million in gold reserves held by the Kyrgyz Ministry of Finance, with a goal to expand the backing to $2 billion. The initiative aims to boost cross-border transactions and promote international trade, particularly in regions like Central Asia, Southeast Asia, and the Middle East.

Gabriel Guerra, an advisor to the project, announced the details at the Token2049 conference in Dubai, noting that remittances make up around 30% of Kyrgyzstan’s GDP—making seamless capital transfers a priority for the nation.

Unlike other asset-backed tokens such as Tether Gold (XAUT) or PAX Gold (PAXG), USDKG is not designed to track gold prices. Instead, it maintains a stable 1:1 peg to the U.S. dollar while being fully collateralized with gold. To ensure transparency, the reserves will undergo independent audits, and the token will be overcollateralized to reduce risks from gold price volatility.

#USDKG holders will have the option to redeem their tokens for physical gold, other crypto assets, or fiat currency, offering flexibility and trust in a digitally backed asset tied to a tangible reserve.

The Kyrgyz government's move reflects a broader trend of exploring blockchain-based solutions to strengthen monetary stability and enhance global trade participation through digital finance.