Kyrgyzstan to Launch Gold-Backed USDKG Stablecoin for Cross-Border Payments

Kyrgyzstan plans to launch its first gold-backed stablecoin, the Gold Dollar (USDKG), in Q3 2025, according to project advisor Gabriel Guerra at Token2049 Dubai. Pegged 1:1 with the U.S. dollar, the USDKG is designed to streamline cross-border transactions and international trade, particularly within Central Asia. Backed by $500 million in gold reserves held by the Kyrgyz Ministry of Finance, the stablecoin is aimed at boosting financial infrastructure in a country where remittances account for around 30% of GDP.

The Kyrgyz government intends to increase gold reserves up to $2 billion, with plans for independent audits to bolster transparency and build investor confidence. While gold is historically viewed as a liquid and stable store of value, price volatility can pose risks. To address this, USDKG will be overcollateralized to ensure price stability and secure its dollar peg.

Unlike asset-pegged tokens like USDT or PAXG, USDKG is not designed to track gold prices. Instead, it will maintain a 1:1 value with the U.S. dollar while being physically backed by gold. Users will be able to redeem the stablecoin for gold, crypto assets, or fiat currency.

The stablecoin’s initial rollout will target cross-border capital movement in Central Asia, with expansion plans into Southeast Asia and the Middle East. This move positions Kyrgyzstan at the forefront of emerging markets leveraging blockchain for remittance innovation and trade efficiency.

By combining gold’s intrinsic value with stablecoin technology, USDKG aims to offer a secure, scalable solution for international payments and financial inclusion in regions with limited banking infrastructure.