The government of Kyrgyzstan has liquidated the state-backed stablecoin USDKG (United States Dollar Kyrgyzstan), which launched in November 2025. The announcement was posted on the project’s official website.
USDKG holders can redeem their tokens for fiat or USDT. The stablecoin was pegged to the US dollar at a 1:1 ratio.
Bishkek promoted USDKG as the world’s first state-issued stablecoin backed by physical gold. Officials said the project would strengthen Kyrgyzstan’s position in the global financial system and lay the groundwork for Web3 infrastructure where the state and businesses interact through blockchain.
However, on August 20, the government ordered the liquidation of the entities managing the stablecoin. The official reason was to streamline state participation in commercial companies and manage state assets more efficiently.
Three months earlier, in May 2026, the UK imposed sanctions on USDKG. London accused the project, along with other companies, of helping Russia evade British sanctions.
