Kyrgyzstan has officially ended its $50 million gold-backed USDKG stablecoin project, less than a year after its launch. The government has also ordered the liquidation of the token’s issuer, EVA, and state-owned cryptocurrency exchange Coin Nomad, following UK sanctions imposed earlier in 2026.
Kyrgyzstan is shutting down its gold-backed USDKG stablecoin project, bringing an end to an ambitious government-supported cryptocurrency initiative launched in November 2025.
The decision affects both the stablecoin’s issuing company, EVA, and Coin Nomad Exchange, the country’s first state-owned cryptocurrency trading platform.
According to an official notice published on the USDKG website, the project is ending under Cabinet of Ministers Order No. 639-t, dated August 20, 2026.
The shutdown covers the project’s activities on blockchain networks, while existing token holders have been directed to contact the issuer about exchanging their holdings for fiat currency or USDT.
The development comes several months after the United Kingdom imposed sanctions on USDKG’s issuer over suspected economic ties to the Russian government.
However, Kyrgyz authorities have not publicly identified those sanctions as the reason for terminating the project.
Kyrgyzstan Orders Shutdown of USDKG Stablecoin and Issuer EVA
The Kyrgyz government has instructed its Ministry of Finance to proceed with the liquidation of OJSC EVA, the company responsible for issuing USDKG.
The decision also covers OJSC Coin Nomad Exchange, a state-owned cryptocurrency trading platform.
According to reports from local media, the government’s August 20 order was introduced as part of broader efforts to improve state asset management and optimize government participation in commercial companies.
The publicly available order does not specifically identify UK sanctions as the reason for the liquidation.
However, the official USDKG website confirms that the project is terminating operations in accordance with the government directive.
This effectively brings the state-supported stablecoin initiative to an end less than one year after its introduction.
The closure represents a significant development for Kyrgyzstan’s digital asset industry, particularly because the project was intended to support blockchain-based financial transactions and international settlements.
USDKG Holders Can Request Redemption in Fiat or USDT
For existing USDKG investors, the immediate concern is how their tokens will be handled during the shutdown.
The project’s official website states that holders can request to exchange their USDKG tokens for traditional fiat currency or Tether’s USDT stablecoin.
Token holders have been instructed to contact the project through its official email address, hello@usdkg.com.
However, the shutdown notice does not provide complete details about the redemption process.
It does not specify a final deadline for submitting requests, identify which fiat currencies are available, or explain all verification requirements.
The project has also not published a complete schedule outlining how long the redemption process may take.
This leaves several practical questions unanswered for investors holding USDKG.
Token holders should verify instructions through the project’s official communication channels and avoid responding to unsolicited messages claiming to offer urgent redemption assistance.
The announcement confirms that a redemption route is being offered, but it does not establish that every holder has already received payment.
What Is USDKG and How Was It Backed by Gold?
USDKG was introduced in November 2025 as a government-supported stablecoin designed to maintain a value equivalent to one U.S. dollar.
Unlike conventional dollar-backed stablecoins that generally rely on cash and short-term financial assets, USDKG was structured around reserves of physical gold.
The project was initially launched with approximately 50 million USDKG tokens.
Its issuer was owned by Kyrgyzstan’s Ministry of Finance, giving the initiative a direct connection to the government.
USDKG was first deployed on the Tron blockchain, with support for Ethereum introduced later.
The token was promoted as a digital payment instrument that could support cross-border transactions and provide an alternative form of stablecoin infrastructure.
Gold Reserve Review Supported the Initial Issuance
Following the launch, an independent reserve review examined the physical gold associated with the stablecoin.
According to the reported findings, Kreston Global inspected 30 gold bars weighing approximately 376 kilograms.
Using London Bullion Market Association pricing from November 28, 2025, the reserves were valued at approximately $50.3 million.
The review concluded that the inspected reserves were sufficient to support the initial issuance of 50 million USDKG tokens.
The examination also included documentation checks and assessments of the issuer’s control over its blockchain wallets.
However, a reserve review conducted at an earlier date does not automatically establish the amount or condition of assets available during a later liquidation.
The shutdown notice has not provided a comprehensive final accounting of the project’s redemption obligations.
UK Sanctions Hit USDKG Issuer in May 2026
The USDKG shutdown follows sanctions imposed by the United Kingdom on May 26, 2026.
Britain’s Foreign, Commonwealth & Development Office designated OJSC Virtual Asset Issuer, the company associated with USDKG, under its Russia sanctions regime.
According to the official designation, UK authorities said they had reasonable grounds to suspect that the company was involved in business activity of economic significance to the Russian government.
The sanctions included restrictions affecting the company’s assets and certain financial and business services.
They also introduced director disqualification and internet-related restrictions.
The measures were part of a broader UK sanctions initiative targeting financial networks suspected of supporting Russian economic activities.
However, an important distinction remains.
The official UK designation did not establish that USDKG itself had processed transactions for the A7 network or directly demonstrate that the stablecoin had been used for sanctions evasion.
The sanctions were imposed on the issuing company based on the grounds identified by UK authorities.
USDKG Issuer Changed Its Name After UK Sanctions
Following the UK sanctions announcement, the company associated with USDKG underwent a corporate name change.
According to Kyrgyz media outlet Akchabar, registration records showed that OJSC Virtual Asset Issuer was renamed OJSC EVA two days after the May 26 designation.
The timing placed the change shortly after the UK sanctions took effect.
However, no publicly confirmed explanation has established that the name change was directly caused by the sanctions.
The same company subsequently became subject to the government’s liquidation directive.
The development highlights the regulatory and operational challenges that can arise when digital asset businesses become involved in international sanctions proceedings.
For state-supported financial projects, restrictions imposed by foreign governments can create additional complications involving banking access, trading venues, and international business relationships.
Nevertheless, the exact relationship between the sanctions and Kyrgyzstan’s liquidation decision has not been officially established.
Hong Kong Exchange OSL Stopped USDKG Services
The UK sanctions were followed by changes to USDKG’s availability through a regulated cryptocurrency trading platform in Hong Kong.
On May 21, 2026, OSL HK announced the listing of USDKG for professional investors.
The platform introduced an over-the-counter trading pair between USDKG and USDT.
The listing provided an additional channel for eligible investors to trade the gold-backed token.
However, the arrangement was short-lived.
On May 27, just six days after the listing announcement, OSL issued a notice stating that all USDKG services would be discontinued.
The decision came one day after the UK sanctions designation.
Although the timing was notable, the available information does not establish every internal consideration behind OSL’s decision.
The removal nevertheless reduced one of the token’s reported institutional trading channels.
USDKG Continues Trading Near $1 Despite Shutdown
Despite the termination announcement, USDKG had not experienced a major reported loss of its dollar peg at the time of the October 8 market analysis.
CoinGecko data cited in the original report showed the token trading around $1.00.
Its 24-hour price range extended from approximately $0.9998 to $1.00.
The platform continued to list roughly 50 million USDKG tokens in circulation, representing an estimated market capitalization near $50.03 million.
However, daily trading activity was relatively limited.
Reported 24-hour volume stood near $22,955, with trading activity visible on decentralized exchanges including Uniswap V3 and Curve on Ethereum.
These figures indicate that the token continued to have some market activity even as the project entered its shutdown process.
However, a stable market price does not guarantee that holders can immediately redeem their tokens at full value.
Market prices, available trading liquidity, and the issuer’s redemption arrangements are separate considerations.
The number of tokens that will ultimately be redeemed during liquidation remains unknown.
What Happens to USDKG Tokens During Liquidation?
The termination of a stablecoin project raises important questions about outstanding tokens and the assets intended to support them.
USDKG’s reported initial issuance was backed by physical gold reserves, but the official shutdown notice does not explain how those reserves will be handled during liquidation.
It also does not describe the complete procedure for redeeming tokens circulating across different blockchain networks.
The issuer previously published smart-contract information for USDKG on Tron and Ethereum.
Its Ethereum contract included administrative functions related to token issuance, redemption, transfer restrictions, and account blacklisting.
Such controls can be important when stablecoin issuers need to manage their tokens.
However, the availability of these contract functions does not confirm that a particular action has been taken against outstanding USDKG holdings.
For token holders, the most important issues are the official redemption procedure, eligibility requirements, and whether the issuer can meet redemption requests.
Further information may become available as the liquidation process progresses.
Coin Nomad Exchange Entered Liquidation in September
The USDKG issuer is not the only state-backed cryptocurrency business affected by Kyrgyzstan’s decision.
Coin Nomad Exchange, the country’s first state-owned cryptocurrency exchange, has also entered liquidation.
According to Akchabar, Coin Nomad’s sole shareholder approved voluntary liquidation on September 3, 2026.
The decision was reported publicly on September 14.
The exchange was established in December 2024, with Kyrgyzstan’s Ministry of Finance serving as its sole shareholder.
Coin Nomad was intended to support the country’s involvement in the cryptocurrency trading industry.
However, the company reportedly faced operational and financial difficulties.
During the first half of 2026, Coin Nomad recorded a net profit of approximately 1.47 million Kyrgyz soms.
Despite that reported net profit, its core operating activities produced a loss.
The company had also reportedly fallen behind on some tax and statutory payment obligations.
Coin Nomad Creditors Face October Deadline
As part of its liquidation process, Coin Nomad announced a period for creditors to submit claims.
The reported notice allowed one month from its September 14 publication.
This places the expected creditor claims deadline around October 14, 2026.
However, that deadline applies to Coin Nomad’s separate liquidation proceedings.
It should not be confused with USDKG token redemption requests, for which the project’s official notice has not specified a final deadline.
Creditors and token holders should therefore verify which legal entity and process apply to their claims.
Kyrgyzstan’s Crypto Industry Faces International Scrutiny
The closure of USDKG and Coin Nomad comes during a period of increased scrutiny of cryptocurrency-related financial networks operating through Kyrgyzstan.
Western authorities have been investigating digital asset services suspected of facilitating financial transactions connected to sanctioned Russian entities.
Several reports have examined cryptocurrency exchanges and payment infrastructure associated with the A7 network and A7A5-related activities.
However, these investigations should not automatically be treated as evidence that every cryptocurrency company operating in Kyrgyzstan participated in sanctions evasion.
The country’s digital asset market includes different businesses, technologies, and financial arrangements.
USDKG’s closure must therefore be considered separately from allegations involving other cryptocurrency networks.
U.S. Treasury Takes Separate Action Against A7 Network
On October 1, 2026, the U.S. Treasury announced a separate sanctions action involving the A7 Network.
According to Treasury, the Office of Foreign Assets Control designated A7 as a transnational criminal organization.
U.S. authorities described A7 as a Russia-linked shadow banking network allegedly used to help Iran evade international sanctions.
The action reflects broader concerns about financial networks that may use alternative payment systems to move funds outside traditional banking channels.
However, the U.S. Treasury announcement did not name USDKG or EVA as targets of that particular action.
This distinction is important when assessing the relationship between cryptocurrency projects and sanctions enforcement.
Although the cases involve overlapping regional and financial concerns, they represent separate regulatory actions.
What the USDKG Shutdown Means for Gold-Backed Stablecoins
USDKG’s closure highlights some of the challenges facing stablecoins linked to physical assets and operated through government-associated companies.
Gold-backed stablecoins are designed to provide blockchain-based access to value supported by physical gold reserves.
However, their long-term reliability depends on several factors beyond the existence of reserve assets.
These include the legal structure of the issuer, custody arrangements, redemption procedures, regulatory compliance, and operational continuity.
Even when a token maintains a stable market price, changes affecting the issuer can introduce uncertainty for holders.
The USDKG case demonstrates how corporate liquidation and international sanctions can complicate the operation of a stablecoin project.
It also highlights the importance of transparent reserve reporting and clearly documented redemption rights.
For investors, the ability to redeem tokens through an established process is a critical consideration when evaluating asset-backed stablecoins.
What’s Next for USDKG and Its Token Holders?
With the USDKG project officially ending, attention is now turning toward the liquidation process and the treatment of outstanding tokens.
The project’s website continues to direct holders to contact the issuer regarding redemption into fiat currency or USDT.
However, several questions remain unanswered.
The issuer has not publicly specified a final redemption deadline, a detailed repayment schedule, or the complete procedures for handling all outstanding token balances.
It also remains unclear how much of the circulating supply will ultimately be submitted for redemption.
Meanwhile, Coin Nomad’s separate liquidation proceedings are continuing under their own creditor claims process.
Future updates from Kyrgyz authorities and the USDKG project may provide additional clarity about the treatment of assets and remaining financial obligations.
Final Thoughts
Kyrgyzstan’s decision to terminate its $50 million USDKG stablecoin project marks a significant development in the country’s cryptocurrency industry.
Launched in November 2025, the government-supported gold-backed token was intended to provide a stable digital asset for blockchain-based financial transactions.
Less than a year later, the project is being wound down alongside its issuing company and the country’s first state-owned cryptocurrency exchange.
The shutdown follows UK sanctions against the USDKG issuer, although Kyrgyz authorities have not officially identified those sanctions as the reason for the liquidation.
For existing investors, the immediate priority is understanding the redemption process and monitoring official announcements.
The USDKG case highlights the importance of regulatory stability, transparent asset backing, and reliable redemption arrangements in the growing market for government-supported and asset-backed stablecoins.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Token holders should consult official project communications and seek qualified guidance where necessary.
