Gold-Backed USDKG Set To Become Legal Tender In Kyrgyzstan

• Kyrgyzstan plans to use USDKG, a gold-backed stablecoin, as legal tender to support financial modernization.
• The country saw crypto mining tax revenue jump 30% in Q1 2025, reflecting stronger sector growth.

Kyrgyzstan has just announced plans to adopt the gold-backed stablecoin USDKG as legal tender. The government is not just testing it out, it is really aiming to make this project a part of people’s daily lives. Imagine, one day people will be able to buy hot tea in Osh or pay for public transportation in Bishkek using a digital token whose value is tied to the US dollar—but backed by real gold behind it.

🇰🇬Kyrgyzstan-backed stablecoin USDKG, pegged to the U.S. dollar and backed by audited gold reserves, aims to become legal tender in the country to ensure transaction stability and build public trust.https://t.co/m9Yf1OSLMa pic.twitter.com/gTb2Icj90i

— Telo News (@Telo_Official) May 30, 2025

Why Kyrgyzstan Is Doubling Down on Digital and Gold-Backed Currencies

USDKG itself is no ordinary token. Each unit is fully backed by physical gold, which is stored in verified storage locations and will be audited regularly. At the initial launch, the amount of gold prepared will reach $500 million, and it is said that it will continue to increase to $2 billion in the next two years.

Previously, Kyrgyzstan President Sadyr Japarov had signed a law to legalize a digital version of the national currency, the digital som.

Kyrgyzstan’s central bank will eventually take control of the development of the payment platform, although its launch will only be seriously considered starting in 2026. So, there are two paths: one is held by the state, the other appears through a gold-based stablecoin.

On the other hand, CNF previously reported that Binance is also approaching this country. They have signed an MoU with the Kyrgyz government to expand the adoption of crypto payments and introduce blockchain education through Binance Pay and Binance Academy. It is clear that this country is indeed serious about building digital infrastructure from various sides, not just sticking projects on.

The Push for Stability Behind the Use of USDKG

Furthermore, there is also the local economy that is starting to be affected. In the first quarter of 2025, tax revenues from the crypto mining sector reached 20.987 million soms—up more than 30% compared to last year.

What does it mean? Activity in this sector is getting more lively. Currently, there are ten mining companies officially registered in the country. This is not a virtual world that is far from real life. This has touched the state treasury.

Coming back to the use of USDKG, a natural question arises: why did Kyrgyzstan choose a gold-based stablecoin instead of creating its own cryptocurrency? The answer may lie in stability.

Market turbulence can make regular crypto go up and down like a roller coaster. But with the backing of gold and a fixed value to the US dollar, USDKG provides more confidence for citizens who may still be hesitant. It’s like having a digital version of a gold piggy bank, but it can be used to shop online or pay for services.