Kyrgyzstan is liquidating USDKG, a state-backed gold stablecoin, along with Coin Nomad Exchange, the country's state-owned crypto platform. The government cited asset-management optimization and improved handling of government resources as reasons for the restructuring.
USDKG launched in November 2025 with approximately 50 million tokens, each pegged to $1 and backed by physical gold. The project was designed for cross-border payments and had been positioned for long-term development.
Under Cabinet of Ministers Order No. 639-t dated August 20, 2026, USDKG operations will be discontinued. All 50,140,738 tokens will be consolidated into single wallets on each supported network before being transferred to burn addresses. Smart contracts on Tron and Ethereum will be suspended, and USDKG will be removed from centralized and decentralized exchanges.
Token holders can request redemption in either fiat currency or USDT before the contracts are suspended, converting the shutdown into an active redemption process rather than a simple abandonment.
The closure follows international scrutiny of the project. The UK sanctioned Virtual Assets Issuer, the company later known as EVA, on May 26, citing reasonable grounds to suspect it had supported or benefited the Russian government through economically significant business. USDKG and USDKG.com were specifically listed as associated names in the sanctions notice.
The stablecoin's failure less than a year after launch highlights the risks facing state-linked crypto assets. While government sponsorship can provide credibility at launch, it also exposes digital currencies directly to sovereign, regulatory, and sanctions risk—potentially matters as consequential as reserves, technology, or the stability mechanism itself.
