Kyrgyzstan has officially launched its national stablecoin, USDKG, issuing more than $50 million worth of tokens backed by gold and pegged to the U.S. dollar. The state-owned company under the Ministry of Finance confirmed that 50,140,738 tokens were issued at a nominal value of one dollar each on October 31, marking the country’s first step toward integrating blockchain-based payments into its financial system. Authorities say the stablecoin is designed to facilitate cross-border transactions and support international trade while enhancing monetary stability. The initiative reflects Bishkek’s ambition to position Kyrgyzstan as a digital finance hub in Central Asia, even as the country faces criticism from Western governments over its economic alignment with Russia. President Sadyr Japarov has maintained a pro-Moscow stance throughout the Ukraine conflict and urged Western nations not to politicize financial systems through sanctions.
The Finance Ministry said it intends to expand USDKG’s backing to $500 million in reserves and eventually scale that figure to $2 billion as adoption grows. Each token is fully collateralized by gold reserves held domestically, ensuring a one-to-one peg to the U.S. dollar. Officials argue that the dual backing structure, both gold and dollar linkage offers enhanced stability and investor confidence, differentiating USDKG from privately issued global stablecoins such as Tether and USDC. The launch also underscores a broader shift among smaller economies experimenting with digital currencies to strengthen their sovereignty in international settlements. Analysts note that Kyrgyzstan’s gold-backed model could serve as a regional pilot for commodity-supported digital assets, blending traditional reserve management with blockchain transparency. The project’s early success, however, will depend on maintaining liquidity, building global acceptance, and ensuring clear regulatory oversight across borders.
In a parallel move that underscores the country’s energy constraints, the Kyrgyz government has ordered a complete shutdown of cryptocurrency mining operations to conserve power amid critically low hydroelectric levels. Energy Minister Talaybek Ibraev said all crypto mining facilities were disconnected from the national grid this week after a severe drop in water capacity at the Toktogul reservoir, which powers most of Kyrgyzstan’s electricity generation. Cryptocurrency mining has long been criticized for its high energy consumption, and the government’s decision signals a broader policy pivot prioritizing energy stability over digital mining revenue. Officials confirmed that temporary restrictions will remain in place until sufficient power generation is restored, with plans to import electricity from Russia and other neighboring countries to stabilize supply.
The dual developments highlight a delicate balance between innovation and infrastructure in Kyrgyzstan’s evolving digital economy. While the USDKG stablecoin could boost financial inclusion and trade flexibility, energy shortages may slow broader crypto adoption until the country strengthens its power capacity.
