USDKG: A Gold-Backed Stablecoin from Kyrgyzstan

A new stablecoin is on the way. In Q3 2025, USDKG is expected to launch – a USD-pegged stablecoin backed by gold reserves held by Kyrgyzstan’s Ministry of Finance.

Which raises the question: what’s the point?

Backing a stablecoin is necessary to give holders confidence that their tokens can always be redeemed for something of real value:

• Liquity USD (LUSD), like the early version of DAI, is backed by ETH. That means any holder can redeem 1 LUSD for an amount of Ether worth about 1 USD at market rates.
• USDP is backed by actual dollars. You can go to the Paxos website and redeem your USDP for fiat directly to your bank account.
• To be fair, USDC is also backed by dollars, but that doesn’t mean any holder can go to Circle and get cash. That privilege is reserved for Circle’s institutional clients.

But what does gold backing actually offer? Is someone really going to ask the Kyrgyz Ministry of Finance to hand over gold in exchange for their tokens? And would the Ministry actually be willing to part with its reserves on demand? I find both hard to imagine.

So, which stablecoin would you prefer? LUSD, DAI, USDP, or USDC - they’re all available for swap at rabbit.io. USDKG isn’t listed yet… but then again, it hasn’t launched either.