Kyrgyzstan plans to issue the USDKG stablecoin, pegged 1:1 to the USD and backed by a portion of the national gold reserves, expected to launch in Q3/2025.
The Kyrgyzstan Ministry of Finance is preparing to issue a state-backed stablecoin in Q3 of 2025. The stablecoin named USDKG will be pegged to the USD at a 1:1 ratio and is specifically backed by a portion of the national gold reserves, according to Mr. Gabriel Guerra, Advisor and co-leader of the 'Gold Dollar' project, at the Token2049 conference in Dubai.
At launch, USDKG will be backed by a gold reserve worth 500 million USD held by the Kyrgyzstan Ministry of Finance. According to the plan, this value will be expanded to 2 billion USD over time, reflecting the ambitions of this Central Asian country to participate in the global digital finance sector.
Gold-backed alternative to CBDC
Unlike popular gold-pegged tokens such as XAUT or PAXG, USDKG is not designed to track the price of gold. Instead, this precious metal only serves as a financial reserve, ensuring value for the stablecoin. Holders of USDKG will have various options for redemption, including physical gold, other digital assets, or conversion to fiat currency.
To mitigate the risk from price volatility of the underlying asset, the project will apply an overcollateralization model. Ensuring transparency in reserve management will be carried out through regular independent audits.
USDKG is primarily aimed at serving cross-border transactions and international trade. The initial implementation phase will focus on the Central Asian region, followed by an expansion into the Southeast Asian and Middle Eastern markets, marking the global ambitions of this project.
The first information about the plan to issue USDKG was announced about a month ago during an AMA (Ask Me Anything) session with representatives from the Kyrgyzstan Ministry of Finance. There, officials stated that this asset is intended as an alternative solution to central bank digital currency (CBDC) – which has been recognized as legal tender in Kyrgyzstan since late April 2024.