Kyrgyzstan has announced the launch of its own state-backed digital currency, USDKG, a gold-backed stablecoin pegged to the US dollar.

With this move, Kyrgyzstan becomes one of the first countries globally to introduce a government-backed stablecoin secured by physical gold reserves. According to the Ministry of Finance of the Kyrgyz Republic, the initial issuance of USDKG is valued at $50 million.

A source within the ministry told The Times of Central Asia that this launch marks just the beginning of a phased rollout.

“In a few weeks, USDKG will be listed on crypto exchanges, making it available for purchase. If the project is successful, we could double the issuance volume within a year and ultimately scale to $1 billion,” the official said.

The stablecoin is being issued by Virtual Asset Issuer, a state-owned company under the Ministry of Finance. The ministry noted that the primary use case for USDKG will be cross-border transactions. Users will be able to convert the digital asset into fiat currency from virtually anywhere in the world.

Momentum for the project grew after a high-profile visit in October by Binance founder Changpeng Zhao, who met with President Sadyr Japarov in Bishkek. Following the meeting, President Japarov instructed the National Council for the Development of Assets and Blockchain Technologies to create the necessary regulatory framework to support the launch and international listing of the KGST stablecoin.

Simultaneously, the National Bank of Kyrgyzstan is developing its own digital currency. Unlike USDKG, this central bank digital currency (CBDC) will be aimed at broad public use and has already been recognized as an official means of payment in the country.

By Anton Chipegin