Kyrgyzstan, Decentralization, Gold, Digital Currency, Stablecoin

Kyrgyzstan is engineering its future as Eurasia’s premier digital finance hub. The government has made digitization a state priority, targeting online delivery of all basic public services by 2028.

The 2022 Law on Virtual Assets provides the foundation, creating a regulated environment with licensing, sandboxes and oversight from Kyrgyzstan’s Financial Supervision Service and Financial Intelligence Service.

This digital ambition is anchored by massive investments in hard infrastructure, including hydropower and solar projects, the China-Kyrgyzstan-Uzbekistan rail corridor and new data centers to lower energy and logistics costs.

A parallel push that focuses on human capital matches these developments, with a national agenda to expand engineering and IT education and forge deep industry-university partnerships. Kyrgyzstan’s message to builders is simple: a reliable and transparent jurisdiction at the crossroads of China, the Middle East and Europe.

The centerpiece of this strategy is USDKG, a state-supported stablecoin fully backed by physical gold and pegged to the US dollar. With reserves held domestically under independent audit and insurance, USDKG is tailored for the demands of modern cross-border trade and settlements. It is designed to slash transaction costs, accelerate value transfer and provide a reliable store of value rooted in a timeless asset.

To unpack the vision behind this ambitious strategy, Cointelegraph sat down with its principal architects: Kyrgyzstan’s Chairman of the Cabinet of Ministers Adylbek Kasymaliev and Minister of Economy and Finance Almaz Baketaev. In this interview, these key figures explain the rationale behind USDKG, the nation’s regulatory philosophy and how blockchain fits into a broader modernization agenda.

Cointelegraph: Why has Kyrgyzstan chosen digital finance as a national priority right now?

Adylbek Kasymaliev: Being located in the very heart of Central Asia, we are a country with no access to the sea. And for such landlocked states, digital technologies are the best road to external markets. Online, our services and ideas can reach the consumer as quickly as from any world capital.

And payments – in this case – ensure what is especially important for a young state like Kyrgyzstan: transparency of financial flows, independence from intermediaries and investor trust in data that cannot be falsified.

That is why we enshrined it in the Digital Kyrgyzstan 2024-2028 strategy [...] and we are opening “sandboxes” so that private projects can test their ideas without excessive bureaucratic barriers.

CT: Where are USDKG’s reserves held, and who is responsible for oversight?

Adylbek Kasymaliev: Each USDKG is 100% secured by physical gold, which is stored in Kyrgyzstan, in the State Development Bank. The gold reserves are held here, and USDKG will undergo regular independent audits to confirm full gold backing. These audit reports are published openly for verification. The entire process is controlled by the state, namely the Ministry of Finance.

Almaz Baketaev: Additionally, the gold will be insured against physical and other risks. Both the audits and the insurance will provide confidence that the gold exists, is real and remains secured over time.

CT: How does USDKG fit alongside a future central bank digital currency (CBDC) like the digital Som?

Almaz Baketaev: It is important to immediately distinguish USDKG from the digital Som. The digital Som will be pegged to the national currency and, in the future, at a certain stage, will be integrated into the economy of Kyrgyzstan. But as for USDKG today, our main focus is more on cross-border payments — international payments, trade payments, export transactions.

CT: Remittances and cross-border transfers are a lifeline for many Kyrgyz families. What role do you see for USDKG there?

Almaz Baketaev: Precisely for this purpose, USDKG will create conditions that make it easier to transfer such funds, using our system. As we have already said, this project is specifically designed for international cross-border transfers. Thus, it will also provide convenient conditions for them.

CT: What is your regulatory stance toward crypto and tokenization?

Adylbek Kasymaliev: We do not want to fall behind the times, and in 2022, our Republic adopted the Law on Virtual Assets, which created a legal framework for issuance, storage and circulation. It includes mandatory licensing, compliance procedures and sector supervision.

Source: USDKG

We have a Financial Supervision Service under the Ministry of Economy and Commerce of the Kyrgyz Republic. Monitoring of operations and financial assets is carried out by the Financial Intelligence Service, which reports to the Ministry of Finance.

Kyrgyzstan follows Financial Action Task Force recommendations and those of other international organizations, ensuring the sustainable development of the digital economy within a framework of transparency and controlled regulation.

CT: How will USDKG actually meet the market? What steps are you taking to ensure users can easily access and use the stablecoin for cross-border payments?

Adylbek Kasymaliev: The Cabinet of Ministers of the Kyrgyz Republic is actively cooperating with financial institutions and technology companies to form the legal and technical conditions necessary for a friendly banking infrastructure. Our priorities include creating hybrid service models where digital assets can be used within existing settlement systems through licensed platforms.

Such solutions will allow us to simplify cross-border payments, reduce the time needed for international settlements and — no less importantly — lower commission costs for both businesses and citizens.

We already have key projects — such as our state exchange and USDKG. The exchange undergoes independent international audits, publishes reports on reserves and uses cybersecurity technologies, including multi-signatures and custody solutions.

CT: Trust and literacy can make or break adoption. What are you doing on that front?

Almaz Baketaev: The first priority is education — specifically, improving financial literacy and training people in the use of digital technologies, stablecoins and tokenization. To support this, we’ve signed a memorandum with Binance, which will conduct training for government officials, entrepreneurs and any citizens interested in learning in this area.

The second priority is trust. Under the chairmanship of our esteemed President Japarov, the High Council for Virtual Assets and Stablecoins was established. Its members include both government officials and representatives of the business community.

CT: Why pursue a public-private model rather than a fully state-run token?

Almaz Baketaev: We believe this project will be more effective precisely in partnership with our partners, who already have experience and expertise in this field. We already have fully formalized contractual agreements with our partners, where every step is specified — in terms of responsibilities, in terms of guarantees and in terms of managing risks.

For us, since this is a new project for Kyrgyzstan, it will be easier to move forward together with proven partners.

CT: Let’s talk milestones. What are the final operational steps required before USDKG is issued, and what is the timeline for the launch?

Almaz Baketaev: Right now, we are at the stage of securing that gold. At this point, we have practically resolved everything — all the regulatory and contractual matters are settled. Literally in the coming days, we are signing another agreement — a regulatory project — under which the Ministry of Finance will purchase a certain amount of gold, and that will serve as the backing for our project. I believe that within a week to ten days, we will proceed with the issuance.

CT: For global investors looking at Kyrgyzstan, the financial infrastructure is just one piece of the puzzle. What are the other key pillars of your national development strategy that are designed to support long-term sustainable growth?

Adylbek Kasymaliev: I would like to highlight the main strategies, three priorities. The first is digitalization. In Kyrgyzstan, both our esteemed President and I attach great importance to this issue. By 2028, all basic government services must be available online and digitized. This will allow us to reduce bureaucracy and strengthen citizens’ trust.

The second important priority is modern infrastructure. We are investing in both small and mega projects — hydroelectric stations, solar power plants. We pay special attention to the creation of transport corridors and to the construction of data centers, so that our energy and logistical costs for business are minimized. We have also already begun construction of the China-Kyrgyzstan-Uzbekistan railway, which in the future will make it possible to reach even European countries.

And the third priority, no less important for us, is human capital. We are increasing the number of state-funded places in engineering and IT specialties, updating school curricula and stimulating partnerships between universities and the private sector. This will allow us to move from a raw-material economy to an economy of knowledge and innovation. It will ensure sustainable growth and create high-quality jobs in Kyrgyzstan.

CT: And the long-term ambition for blockchain inside government and the economy?

Almaz Baketaev: In the long term, I see complete digitalization. Today, we are already talking about digitizing all financial instruments and organizing our assets. But if we look deeper, the technology allows us to tokenize absolutely everything and transfer it onto a digital platform.

This means that whether it’s property rights, buildings, cars or objects — everything will have a digital copy, which will radically transform the way our systems function. This even applies to the structure of government itself. We are already moving in that direction, and in the future, the entire framework of state administration will be completely revised with the use of blockchain technologies.

I believe everyone will recognize the importance of our current initiative. This is a government initiative — the first of its kind. The stablecoin, USDKG, will be backed by real, physical gold. This is not just a promise of backing; it is gold that will actually be there. And, of course, for ease of transactions, it will also be pegged to the US dollar. I think this will create real convenience for all users and contribute to broad recognition.

CT: Final message to global investors and builders reading this?

Adylbek Kasymaliev: Kyrgyzstan is a technological and reliable partner in the center of Eurasia, at the crossroads of logistic and digital routes between China, the Middle East and Europe. We emphasize green energy, adaptive regulation and the pace of implementing modern solutions — all while fully observing international standards of transparency and security.

We invite the global community — venture funds, technology companies and institutional investors — to look at Kyrgyzstan not as the periphery, but as a new strategic growth point, where ideas can be scaled safely. In conclusion, I would say: come to Kyrgyzstan — with investments, with partners, with projects. Here you will find a state that not only listens, but acts. We welcome everybody.

Learn more about USDKG

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