A Major Step from the Ministry of Finance: 500 Million Dollar Backed Coin to be Issued! - Coin Bulletin

Kyrgyzstan plans to launch the gold-backed USDKG stablecoin pegged 1:1 to the US Dollar in Q3.

The Ministry of Finance of Kyrgyzstan aims to facilitate cross-border transfers in Kyrgyzstan, where international money transfers hold a significant share in the country’s economy, with a stablecoin backed by 500 million dollars worth of gold. These transfers account for 30% of the country’s gross domestic product, (GDP), and can significantly increase the usage area of USDKG. The Ministry aims to raise its gold reserves to 2 billion dollars and ensure the security and transparency of the collateral through independent audits.

Gold has long been considered a highly liquid, risk-free store of value. However, occasional price fluctuations can pose a risk to the stability of stablecoins. To mitigate this risk, it is stated that stablecoins will be over-collateralized.

Gabriel Guerra, the advisor of the project, stated that the main use case of the stablecoin will be cross-border transactions and international trade, primarily in Central Asia. In the future, expansion to Southeast Asia and the Middle East is planned.

It was also emphasized that USDKG does not intend to track gold prices, nor will it depreciate like stablecoins such as USDT or PAXG. Instead, USDKG will only be backed by gold reserves and will be traded with US dollars at a 1:1 ratio. Thus, it will maintain a stable value that is directly linked to the global reserve currency, the US Dollar. Holders of USDKG will be able to exchange their stablecoins for physical gold or other crypto assets, or withdraw them as fiat money.