- USDKG pegged 1:1 with the U.S. dollar, backed by national gold reserves
- The launch is set for Q3 2025, with $500 million in initial collateral
- Kyrgyzstan aims to improve cross-border payments and international trade
Kyrgyzstan is set to debut a gold-backed stablecoin, USDKG, by the third quarter of 2025. Backed by the nation’s Ministry of Finance gold reserves and pegged 1:1 to the U.S. dollar, the initiative targets improving cross-border payments and trade in Central Asia, a region where remittances make up nearly 30% of Kyrgyzstan’s GDP.
In its initial phase, USDKG will be backed by $500 million worth of gold. The Ministry of Finance will oversee the reserves and plans to increase the backing to $2 billion over time.
Related: 2025 Could Be Stablecoins’ Breakout Year as Adoption Hits Every Level
Project consultant Gabriel Guerra shared these details during the Token2049 conference in Dubai. He emphasized that transparency and trust will be maintained through regular independent audits of the gold reserves.
USDKG Pegged to USD, Not Gold
Unlike other gold-related tokens, USDKG will not track the market price of gold. Instead, it will maintain a stable 1:1 value with the U.S. dollar. However, because gold prices can fluctuate, the token will be overcollateralized. This means more gold will be held in reserve than the actual value of the USDKG issued, helping safeguard its dollar peg.
By anchoring the token’s value to the U.S. dollar instead of the fluctuating price of gold, USDKG offers price predictability for users engaged in trade and finance. This hybrid model positions USDKG as a unique offering in traditional and digital financial markets.
The rollout will initially target Central Asia, where demand for efficient digital financial tools is growing. Kyrgyzstan hopes the stablecoin will simplify cross-border money transfers for individuals and businesses.
The government also plans to expand USDKG’s reach to Southeast Asia and the Middle East, regions with high remittance flows and increasing interest in digital finance.
Related: UAE’s First Regulated Stablecoin to Be Issued by First Abu Dhabi Bank
Binance and Kyrgyzstan Partner to Fuel Digital Economy
In a related development, Binance has signed an agreement with the Kyrgyz Republic to support its transition to a digital economy. The deal was formalized on May 4 during the first meeting of the Council for the Development of Digital Assets. It introduces Binance Pay across Kyrgyzstan to enable secure, borderless crypto payments.
The partnership also includes national blockchain education programs and infrastructure development. Binance Academy will collaborate with local institutions to deliver training in decentralized finance (DeFi), smart contracts, and digital governance.
Additionally, Binance will support Kyrgyzstan in exploring blockchain applications in public services and in piloting the digital som, the country’s proposed central bank digital currency (CBDC).
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