Kyrgyz authorities hope it will attract investment and tech partnerships.
The government of Kyrgyzstan has officially launched USDKG, a stablecoin backed by gold and pegged to the U.S. fiat currency.
The authorities in Bishkek expect that the crypto, issued by a state-owned entity, will put the country on the map of global finances and attract investments.
Kyrgyzstan to issue 50 million USDKG tokens on Tron
Officials in Kyrgyzstan have issued the country’s first stablecoin, backed by physical gold. USDKG is a digital currency pegged to the Greenback.
An official ceremony in the capital city was attended by President Sadyr Zhaparov. He was joined by Finance Minister Almaz Baketayev.
Also present was Biybolot Mamytov, Chairman of the Board of OJSC “Issuer of Virtual Assets,” the fully state-owned company that’s putting the crypto into circulation.
Participates in the event pressed a symbolic “Launch Issue” button, initiating the minting of 50 million USDKG tokens on the Tron blockchain, each equal to one U.S. dollar.
Reporting on the development and quoting Zhaparov’s office, the Azerbaijani news agency Trend, which focuses on current events in the Caucasus and Central Asia, noted:
“USDKG is crafted as a digital currency, marrying the steadfastness of gold with the cutting edge of blockchain technology.”
Kyrgyz authorities say the stablecoin should enhance Kyrgyzstan’s presence in the global financial ecosystem and serve to support the development of Web3 services in the country.
The dollar-denominated cryptocurrency is also expected to strengthen interactions between the public and the private sector through various blockchain solutions.
Moreover, the government hopes that the USDKG will become a game changer when it comes to the former Soviet republic’s appeal as an investment destination – “opening the floodgates for capital inflows and paving the way for technology partnerships,” as Trend put it.
Kyrgyz government making good on stablecoin promise
The upcoming launch of what Bishkek describes as the world’s first state-sponsored stablecoin backed by real reserves of gold was announced by the Kyrgyz finance ministry earlier in November.
At the time, the crypto was registered by the State Service for Regulation and Supervision of Financial Markets – the government agency responsible for oversight of non-bank institutions in the sector.
Announcing the registration, Kyrgyzstan’s Treasury said that the digital currency will be issued and listed on both centralized and decentralized exchanges in the coming days and promised further details.
The plan to launch the so-called “Gold Dollar” was first made public in May. Initial statements suggested it should be minted in the third quarter of the year.
It was supposed to be underpinned by $500 million worth of state-owned gold initially, with plans to expand these reserves to at least $2 billion, as reported by Cryptopolitan.
The finance ministry emphasized that USDKG is not to be confused with the digital som (KGST), the country’s central bank digital currency (CBDC) project. The latter is still under consideration.
Kyrgyzstan is already home to a major stablecoin – the Russian ruble-pegged A7A5, which accounts for half of the total capitalization of all non-dollar stablecoins in the world.
This crypto has caused some serious troubles for the country as it’s allegedly being used by Russia to circumvent financial restrictions imposed over the Ukraine war.
Created by a Russian company, the coin is currently issued by a Kyrgyz-registered firm. As a result, organizations linked to A7A5, including Kyrgyz crypto platforms and banks, have been targeted in sanctions adopted by the U.S., the U.K., and the European Union.
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