Kyrgyzstan launches $50 million in national stablecoin

Kyrgyzstan has issued more than $50 million worth of its new national stablecoin, USDKG, according to the country’s financial regulator. The token is pegged to the U.S. dollar and backed by gold reserves.

At the same time, the government announced a nationwide halt to all crypto mining operations on Wednesday as the country faces a worsening electricity shortage.

Kyrgyzstan — a mountainous Central Asian nation of about 7 million people — has been working to position itself as a regional leader in cryptocurrency. However, some of its crypto companies have recently been sanctioned by Western governments, who claim the firms are helping Russia, a close ally of Kyrgyzstan, sidestep international sanctions. President Sadyr Japarov, who generally aligns with Moscow on the Ukraine conflict, has urged Western nations not to “politicize the economy” through sanctions.

According to regulators, exactly 50,140,738 USDKG tokens were issued on Oct. 31st, each with a nominal value of $1. The stablecoin is managed by a state-owned company under the authority of the Finance Ministry.

Backed by gold and pegged 1:1 to the dollar, USDKG is designed for cross-border transactions and international trade. The Finance Ministry has previously stated that it intends to allocate $500 million to support the stablecoin, with plans to eventually raise reserves to $2 billion.

Crypto mining shut down to conserve energy

Energy Minister Talaybek Ibraev confirmed that all crypto mining farms in Kyrgyzstan have been disconnected from the national power grid due to critically low water levels at the country’s main hydroelectric power plant.

Crypto mining consumes significant amounts of electricity, and the government has rolled out restrictions on energy use along with other conservation measures. To address the shortage, officials also plan to import additional power from neighboring countries, including Russia.