Kyrgyzstan will shut down its USDKG stablecoin after ordering the liquidation of its issuing company.
The project announced the decision on Wednesday, October 7 and said holders can exchange their tokens for fiat currency or USDT.
The Cabinet approved Order No. 639-t on August 20, 2026, to improve state asset management.
The order also cancelled several government decisions linked to Kyrgyzstan’s crypto plans. One decision approved a November 2024 roadmap for a cryptocurrency pilot project. The pilot aimed to introduce new financial instruments and attract additional investment.
The Finance Ministry must liquidate JSC Virtual Asset Issuer, which issued USDKG. The order also requires the liquidation of Coin Nomad Exchange, Kyrgyzstan’s first state-owned crypto exchange.
Coin Nomad started voluntary liquidation after its sole shareholder approved the move on September 3. The exchange reported 1.47 million soms in net profit during the first half of 2026.
However, Coin Nomad remained unprofitable in its core operations during that period. Kyrgyzstan launched USDKG on November 20, 2025, with 50 million tokens worth $1 each.
The issuer backed the tokens with physical gold and linked them to the US dollar. The project aimed to support international settlements, attract investment, and develop Web3 infrastructure.
USDKG later reached professional investors through OSL in Hong Kong. The token also traded on Curve and Uniswap and gained support from several crypto wallets.
USDKG Holders Face Unclear Redemption Process
USDKG holders can exchange their tokens for fiat currency or USDT during the shutdown. However, the project has not announced a final deadline for those redemptions. It has also not explained how the full settlement process will work.
The project has not explained what will happen to its gold reserves after settlements. Blockchain observers estimate that about 50 million USDKG remain in circulation. TRON holds about 47 million tokens, while Ethereum holds another 3 million.
Kreston Global audited the USDKG gold reserves in December 2025. The audit confirmed 30 gold bars with a combined weight of about 376 kilograms. The government has not explained how it will handle those reserves after liquidation.
OSL added USDKG for professional investors in Hong Kong in May 2026. The platform offered a USDKG/USDT market through its over-the-counter service.
UK Sanctions Add Context to Kyrgyzstan Crypto Restructuring
The shutdown comes about four months after the United Kingdom (UK) sanctioned JSC Virtual Asset Issuer.
Britain added the company to its Russia sanctions list on May 26, 2026. The UK said it had reasonable grounds to suspect that the company supported or benefited Russia. British authorities froze the company’s assets under the sanctions measures.
The UK also restricted the company’s directors from holding executive positions. British authorities restricted access to the company’s online services from Britain.
However, Kyrgyzstan did not directly link the sanctions to the USDKG shutdown.
The Cabinet order instead cites state asset management and restructuring as reasons for the liquidation.
Kyrgyzstan previously terminated 16 companies as part of efforts to reduce sanctions risks.
The Economy Ministry later started forced liquidation proceedings against about 35 other entities.
Officials linked those entities to elevated sanctions and compliance risks.
Kyrgyzstan still operates KGST, a stablecoin pegged to the Kyrgyz som at a one-to-one rate.
Binance data placed KGST among the three most traded tokens among new Kyrgyz users in August.
The National Bank must develop a basic digital som platform by December 31, 2026.
The bank plans to test the platform before starting real-world trials in 2027.
