Kyrgyzstan Launches USDKG: World's First Gold-Backed Government Stablecoin

Kyrgyzstan has officially launched USDKG, the world's first gold-backed government stablecoin, pegged 1:1 to the US dollar. The Ministry of Finance confirmed the rollout, emphasizing that USDKG merges blockchain transparency with the security of physical gold reserves. This initiative marks a significant milestone in the country's digital finance strategy and economic innovation efforts.

The State Service for Regulation and Supervision of Financial Markets approved the issuance, with USDKG fully collateralized by gold and issued by OJSC 'Issuer of Virtual Assets,' a fully government-owned entity. Initial gold reserves are valued at $500 million, with plans to expand to $2 billion over time. The stablecoin operates independently of other projects, such as the digital som (KGST) or central bank digital currency initiatives, and is part of a pilot program to strengthen financial sovereignty and position Kyrgyzstan as a regional digital asset hub.

USDKG is designed primarily for cross-border transactions, starting in Central Asia and extending to Southeast Asia and the Middle East. Users can redeem the stablecoin for gold, fiat currency, or other cryptocurrencies, ensuring flexibility. Independent audits will verify the gold backing to ensure credibility and transparency. Listings on both centralized and decentralized exchanges are expected in the coming days, with official announcements to detail the mechanism, volume, and timing.

The development cost approximately $5 billion from the state budget, and the project was formally registered one week before the public launch. Advisor Gabriel Guerra confirmed the Q3 2025 timeline, and Binance founder Changpeng Zhao initially shared news of the plans at Token2049 in Dubai. The launch has attracted international attention, with authorities expecting USDKG to support remittances, boost regional trade, and drive blockchain adoption.