Authorities in Kyrgyzstan have announced plans to issue a gold-backed stablecoin. The project, named Gold Dollar (USDKG), is expected to launch in the third quarter of 2025.
The announcement came from project advisor Gabriel Guerra in an interview with CoinDesk at the Token2049 conference in Dubai. The new asset will be denominated in US dollars and backed by $500 million worth of gold reserves held by the Ministry of Finance of Kyrgyzstan.
The initiative aims to simplify cross-border payments — an especially relevant issue for Kyrgyzstan, where remittances account for around 30% of the country’s gross domestic product.
Gold Backing and Independent Audits
According to Guerra, the backing for USDKG will come from state gold reserves, with plans to increase the reserve base to $2 billion. To maintain investor trust, the government intends to conduct regular independent audits verifying the adequacy and authenticity of the collateral reserves.
Although gold is considered a stable and liquid asset, the Kyrgyz Ministry of Finance acknowledges that fluctuations in its market price could affect the value of the stablecoin. In response, developers have designed an over-collateralization mechanism — tokens will be issued with a buffer to ensure price stability even as gold prices change.
Use in International Trade
The primary goal of USDKG is to facilitate cross-border settlements and international trade. The stablecoin is initially intended for use within Central Asia, with plans to expand into Southeast Asia and the Middle East.
Guerra clarified that USDKG will not follow gold price fluctuations, unlike tokens such as PAXG. It will maintain a fixed 1:1 exchange rate with the US dollar and will be issued exclusively against gold reserves. As a result, USDKG’s price will remain stable, unlike other tokens whose values are directly tied to precious metal prices.
It is noted that holders of USDKG will be able to exchange tokens for fiat currencies or other crypto assets. There will also be an option to redeem the token for physical gold—making the new stablecoin a potentially attractive tool for investors prioritizing security and the ability to quickly move capital across borders.
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