Kyrgyzstan has brought its state-backed USDKG stablecoin project to an end, ordering the liquidation of both the token's issuer and the country's first state-owned cryptocurrency exchange. The wind-down follows the project's launch in November 2025 and United Kingdom sanctions imposed on the stablecoin's original issuer in May 2026. USDKG holders can still redeem their tokens for fiat currency or USDT as the state-backed initiative winds down.

Kyrgyzstan Orders Liquidation of USDKG Issuer and State Exchange

According to a Wu Blockchain post on X, Kyrgyzstan has moved to shut down USDKG, a gold-backed stablecoin that launched in November 2025. Alongside the token's closure, the government ordered the liquidation of EVA, the entity that issued the stablecoin, and Coin Nomad Exchange, the country's first state-owned crypto exchange.

The decision stems from Cabinet of Ministers Order No. 639-t, dated August 20, which set out to optimize state participation in commercial entities and improve the management of state assets. The same order also revoked earlier decisions connected to the country's cryptocurrency pilot program.

USDKG was introduced with a registered supply of slightly more than 50 million tokens. The asset was pegged 1:1 to the U.S. dollar and backed by physical gold held in reserve. Authorities promoted the stablecoin as a tool for cross-border payments and as part of the country's broader push into digital asset development. The gold-backed design set USDKG apart from the fiat-reserve structures behind most major dollar-pegged stablecoins, anchoring its redemption claims in commodity holdings rather than cash and cash-equivalent reserves.

The X post read:

Kyrgyzstan Ends State-Backed Stablecoin Project Months After UK Sanctions

Kyrgyzstan has decided to shut down USDKG, its $50 million state-backed gold stablecoin project, and ordered the liquidation of issuer EVA and Coin Nomad Exchange, the country's first state-owned crypto… pic.twitter.com/3atYDBlurm

— Wu Blockchain (@WuBlockchain) October 8, 2026

The first issuance comprised 50 million tokens deployed on the Tron blockchain. Support for Ethereum was introduced later, and the token also became accessible through decentralized trading platforms.

Reserve assurances came from Kreston Global, which reviewed a reserve of 30 gold bars weighing approximately 376 kilograms. Based on November 2025 gold prices, those reserves were valued at roughly $50.3 million, providing backing for the initial issuance. Independent reserve reviews of this kind are a common transparency practice in the stablecoin sector, where the quality of backing assets is a recurring point of scrutiny.

USDKG holders can currently request redemption of their tokens in fiat currency or USDT. The project, however, has not published a final redemption deadline or detailed settlement procedures for the wind-down. Until that guidance is published, the redemption channel itself is the detail for holders to track as the liquidation proceeds.

UK Sanctions Preceded the Shutdown

The shutdown comes months after the United Kingdom sanctioned USDKG's original issuer, Virtual Asset Issuer, on May 26, 2026. At the time, British authorities said there were reasonable grounds to suspect the company had supported, or otherwise benefited from, Russia's government through economically significant business activities.

The UK designation listed USDKG and USDKG.com as associated names. It imposed asset-freezing measures and additional restrictions affecting the company's operations and management.

Two days after the sanctions took effect, the issuer was re-registered as EVA. The Kyrgyz government has not officially stated that the UK sanctions caused the subsequentation. Even so, the timing places the shutdown against a backdrop of growing international scrutiny of crypto infrastructure linked to Russia and sanctions evasion.

USDKG had reached the regulated Hong Kong platform OSL shortly before the UK designation. OSL subsequently announced that USDKG services would stop after the sanctions were imposed. The sequence, from naming the token itself among associated entities to a regulated venue suspending support, shows how a designation aimed at one issuer can extend across a stablecoin's surrounding service chain.

Coin Nomad, for its part, had already entered voluntary liquidation in September. Its sole shareholder, the Ministry of Finance, approved the process on September 3, giving creditors a limited period to submit claims.

Taken together, the closure of USDKG marks the end of Kyrgyzstan's attempt to establish a government-backed, gold-supported dollar stablecoin. The country continues to develop other digital currency initiatives, including plans for a pilot of a digital som, its national currency. The digital som sits on a separate track: as a central bank digital currency, it would represent the national currency itself rather than a dollar-pegged token, making its planned pilot the next initiative to watch in the country's digital asset agenda.