Kyrgyzstan is set to introduce the Gold Dollar (USDKG), a gold-backed stablecoin pegged 1:1 to the U.S. dollar, in the third quarter of 2025. Gabriel Guerra, advisor to the project, shared the announcement during the Token2049 conference in Dubai.
The stablecoin will initially be backed by $500 million in gold reserves held by the Kyrgyz Ministry of Finance, and the country plans to increase the gold backing to $2 billion in the future. This ambitious project is designed to streamline cross-border transactions in a country where remittances account for 30% of the GDP, making efficient money transfers a priority.
To ensure transparency and accountability, independent audits of the gold reserves are planned. Gold’s reputation as a liquid and risk-free store of value makes it an ideal asset for this purpose, though its price fluctuations present potential challenges for maintaining the stablecoin’s stability.
To address these risks, the USDKG stablecoin will be overcollateralized, according to Guerra. The stablecoin’s primary use case will focus on cross-border transfers, especially in Central Asia, with plans to expand into Southeast Asia and the Middle East.
While the USDKG is not designed to track gold prices like USDT or PAXG, it will be fully backed by gold reserves and issued on a 1:1 basis with the U.S. dollar, offering a stable value aligned with the global reserve currency.
Holders of USDKG will have the option to redeem their coins for physical gold, other cryptocurrencies, or fiat currency, offering flexibility and liquidity in the evolving digital economy.
