Kyrgyzstan winds down state-run gold stablecoin after sanctions hit
DeFi & Yields ·
Authorities move to dissolve the $50M USDKG token and liquidate its issuer following UK sanctions tied to alleged Russia links.
Kyrgyzstan has moved to dismantle USDKG, a $50 million stablecoin project backed by the state, along with orders to liquidate both the token's issuer, EVA, and Coin Nomad Exchange, which had served as the nation's first government-owned crypto trading platform, according to a report.
The token had only recently entered circulation, going live in November 2025 as a dollar-pegged asset maintained at a 1:1 ratio and collateralized by physical gold reserves. Its stated purpose centered on facilitating cross-border payments, positioning it as a sovereign-backed alternative within the stablecoin space.
The shutdown comes after the United Kingdom placed sanctions on EVA in May 2026, citing alleged ties to support for Russia. That designation appears to have precipitated the broader unwinding of the project, though the exact timeline between the sanctions and the liquidation order has not been detailed.
The move effectively ends a state-driven experiment in combining gold backing with dollar-pegged stability for a national digital currency initiative, barely half a year after its debut. Coverage of the development has been corroborated by two distinct sources tracking the cluster, though neither has published additional detail on the liquidation process itself.
Several questions remain unaddressed in available reporting: what happens to the gold reserves that underpinned the token, how holders of USDKG will be compensated or whether they will be, and what triggered the gap between the May 2026 sanctions and the eventual shutdown decision. It is also unclear whether Kyrgyzstan plans any successor project or will abandon state-backed stablecoin efforts altogether. Further detail on the liquidation proceedings for EVA and Coin Nomad Exchange, including timelines and asset disposition, has not yet surfaced.