Kyrgyzstan Orders USDKG and Crypto Exchange Liquidation
Kyrgyzstan is ending its state-backed USDKG stablecoin project as part of a government restructuring that also targets state-owned Coin Nomad Exchange. The decision involves liquidating EVA, the company responsible for issuing USDKG, and winding down the country’s first state-owned cryptocurrency exchange.
Authorities have described the restructuring as an effort to optimize the government’s participation in companies and improve the management of state assets. The decision brings an end to a sovereign crypto initiative that combined a dollar-pegged token with physical gold reserves.
USDKG launched in November 2025 with slightly more than 50 million tokens. Each token was designed to maintain a value of $1 and be backed by physical gold. The project was positioned for applications such as cross-border payments, but its operations are now set to cease.
More Than 50 Million USDKG Tokens to Be Burned
The shutdown involves more than stopping new token issuance. Under the project’s announced plan, holders can request redemption of USDKG into fiat currency or USDT before the token’s remaining supply is removed from circulation.
The project’s official account announced that operations would be discontinued under Order No. 639-t of the Cabinet of Ministers of the Kyrgyz Republic, dated August 20, 2026. The announcement is available on the official USDKG account.
The planned process covers 50,140,738 USDKG tokens. The project intends to consolidate the tokens into a single wallet on each supported blockchain before transferring the balances to burn addresses. Its smart contracts on Tron and Ethereum are then expected to be suspended, and USDKG is to be removed from centralized and decentralized exchanges.
A token burn sends assets to addresses from which they cannot be spent, removing them from usable circulation. In this case, the planned burn forms part of a broader shutdown and redemption process rather than an ordinary reduction in token supply.
UK Sanctions Added Pressure on USDKG’s Issuer
The closure follows UK sanctions imposed on Virtual Assets Issuer on May 26, 2026. The company was subsequently known as EVA, the issuer associated with USDKG.
The UK sanctions notice stated that there were reasonable grounds to suspect the company had supported or benefited from the Russian government through business of economic significance. The document also listed USDKG and USDKG.com among the associated names. The notice is available through the UK government’s published sanctions document.
However, the stated reason for the Kyrgyz government’s liquidation order is the optimization of state asset management. The available information does not establish that the UK sanctions were the direct cause of the government’s decision to shut down the project.
The distinction matters because the sanctions and the liquidation are separate developments, even though both affect the future of the issuer and its stablecoin.
What USDKG’s Shutdown Means for Token Holders
USDKG holders face a different situation from users of a stablecoin that continues operating normally. The announced plan gives holders a redemption route through fiat currency or USDT while the project prepares to consolidate and burn its remaining tokens.
Users holding USDKG should pay attention to the issuer’s official instructions regarding redemption, supported networks and the timing of contract suspension. Once the smart contracts are suspended and exchange support ends, ordinary transfers and trading may no longer be available as before.
The planned removal from both centralized and decentralized exchanges also means the project is not simply moving to a new trading venue. Its stated direction is to discontinue the token and wind down its supporting infrastructure.
A State-Backed Gold Stablecoin Experiment Ends
USDKG differed from many widely used stablecoins because it combined a dollar peg with physical-gold backing under a government-linked issuer. Stablecoins generally aim to maintain a relatively stable value against an asset such as the US dollar, but their reserve structures and redemption arrangements vary.
The project’s closure highlights the challenges that can affect state-linked digital assets. Reserve design, blockchain infrastructure and the ability to maintain a peg are important, but legal and geopolitical developments can also influence whether an issuer is able to continue operating.
For the wider stablecoin sector, USDKG provides an example of how government involvement does not eliminate operational or regulatory risk. The project’s planned wind-down also demonstrates why users need to understand redemption rights, issuer arrangements and the rules governing the networks on which a token operates.
Kyrgyzstan’s decision now puts the focus on the execution of the shutdown: how holders redeem their balances, how the 50.14 million tokens are consolidated and burned, and when the issuer’s contracts and exchange listings are finally discontinued.
