Kyrgyzstan Shuts Down Gold-Backed USDKG Stablecoin After UK Sanctions
Kyrgyzstan Ends Operations for Gold-Backed USDKG Stablecoin
Kyrgyzstan is shutting down its government-backed, gold-backed stablecoin called USDKG, less than a year after launching 50 million tokens. Holders can now request a refund in regular currency or in USDT, a popular stablecoin pegged to the US dollar.
An August 20, 2026 order from Kyrgyzstan's Cabinet of Ministers directs the Finance Ministry to liquidate EVA, the renamed issuer, and Coin Nomad Exchange. USDKG's shutdown notice, posted October 5, cites that order as the legal basis for ending operations, including on blockchain networks.
The wind-down follows UK sanctions imposed on May 26, 2026 on OJSC Virtual Asset Issuer, the company behind USDKG. The UK stated it had reasonable grounds to suspect the firm benefited from or supported Russia's government through business considered economically significant to that government. The sanctions include an asset freeze and restrictions on trust and internet services.
Key Details on the Shutdown
- Holders can email [email protected] with their token amount and wallet address to arrange redemption for fiat currency or USDT.
- The project plans to consolidate outstanding tokens and send them to burn addresses on Ethereum and Tron blockchains.
- Smart contracts on both networks will be suspended, and transaction hashes will be published after the burns are completed.
- No final deadline for redemptions has been announced.
Conflicting Reasons for the Closure
The official shutdown documents do not name the UK sanctions as the reason for ending the project. Instead, the cabinet order states the closure is meant to optimize state participation in commercial companies and improve management of state assets.
This creates a discrepancy between the timing of the UK's sanctions designation and the stated rationale from Kyrgyz officials.
Gold Reserves Left Unclear
In November 2025, Kyrgyzstan's Finance Ministry confirmed it owned 100 percent of Virtual Asset Issuer and that each USDKG token was backed by physical gold. A December 2025 audit by Kreston Global inspected 30 gold bars weighing approximately 376 kilograms, valued at about $50.3 million at the time of inspection.
The stablecoin's whitepaper assigned custody and collateral management to an independent Kyrgyz-registered private entity.
Neither the cabinet order nor the shutdown notices specify what will happen to the gold reserves, whether they will be sold, transferred, or returned, or who will verify their disposition.
Why This Matters for Stablecoin Users
USDKG was notable as one of the few government-issued stablecoins backed by physical gold rather than traditional currency reserves. Its abrupt shutdown raises questions about the reliability of state-sponsored tokenized assets and the transparency of reserve management, especially when regulatory pressures from other jurisdictions are involved.
What Happens Next
USDKG has said it will complete the planned token burns and publish the corresponding transaction hashes on Ethereum and Tron. Holders who have not yet requested redemption are urged to contact the project via email.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.