Kyrgyzstan Winds Down Gold-Backed USDKG After UK Sanctions

Thu Oct 09 2026

Kyrgyzstan is winding down its state-backed, gold-backed USDKG stablecoin less than a year after its initial issuance of 50 million dollar-pegged tokens, with holders offered exchanges into fiat currency or USDT.

An Aug. 20, 2026, Cabinet of Ministers order directs the Finance Ministry to liquidate EVA—the renamed issuer, according to local outlet Kaktus.media—and Coin Nomad Exchange. USDKG’s shutdown notice identifies that order, No. 639-t, as the basis for ending the project’s operations, including on blockchain networks.

“The issuance and circulation of USDKG will cease,” the project said in an Oct. 5 announcement. Holders can email hello\@usdkg.com with their token amount and wallet address to arrange redemption or exchange for fiat or USDT. The project plans to consolidate outstanding tokens and send them to burn addresses on Ethereum and Tron.

The wind-down follows the UK’s May 26 designation of OJSC Virtual Asset Issuer under its Russia sanctions regime. The UK said it had “reasonable grounds to suspect” the company had obtained a benefit from or supported Russia’s government through business “of economic significance” to that government. The measures include an asset freeze and restrictions on trust and internet services.

The cabinet order gives a different stated rationale: optimizing state participation in commercial companies and improving management of state assets. Neither the order nor USDKG’s shutdown announcements identifies the UK sanctions as the reason for closing the project.

Gold Reserves’ Disposition Unspecified

The Finance Ministry said in November 2025 that it owned 100% of Virtual Asset Issuer and that one USDKG equaled one U.S. dollar, with physical gold backing. USDKG subsequently said it completed its first issuance of 50 million tokens on Nov. 20, 2025.

In a Dec. 8 account of a reserve review, USDKG said Kreston Global inspected 30 gold bars weighing approximately 376 kilograms, valued at about $50.3 million at the time of inspection. Its whitepaper assigns custody and collateral management to an independent Kyrgyz-registered private entity.

Neither the cabinet order nor the shutdown notices specifies whether the gold will be sold, transferred or returned, or who will verify its disposition. The notices also give no final redemption deadline.

USDKG says it will suspend its smart contracts on both networks and publish the transaction hashes after completing the planned token burns.

Source: https://thedefiant.io