Kyrgyzstan is shutting down USDKG, the state-backed stablecoin launched last year with a dollar peg and physical gold backing, and is also liquidating its issuer EVA and the state-owned Coin Nomad Exchange. Authorities have framed the move as part of a restructuring aimed at improving the management of state assets and optimizing government participation in companies.

The closure will not be limited to stopping new issuance. The project has said all outstanding USDKG will be redeemed or removed from circulation, marking a full unwind of one of the more unusual state-linked crypto initiatives in the market.

Cabinet order triggers full shutdown

According to the project’s official X account, USDKG operations will end under Cabinet Order No. 639-t of the Cabinet of Ministers of the Kyrgyz Republic dated Aug. 20, 2026. The same process includes the liquidation of EVA, the stablecoin’s issuer, and Coin Nomad Exchange, described as the country’s first state-owned crypto exchange.

Kyrgyz authorities said the restructuring is intended to optimize state participation in companies and improve the management of government assets. The stated explanation from the government focuses on asset-management goals rather than presenting the move as a direct response to outside pressure.

More than 50 million tokens set for redemption and burn

USDKG launched in November 2025 with just over 50 million tokens. Each token was designed to hold a value of $1 while being backed by physical gold, and the project was promoted for cross-border payments and longer-term development.

The wind-down plan covers all 50,140,738 USDKG. Holders are being offered redemption into fiat currency or USDT. After that process, the project said the tokens will be consolidated into a single wallet on each supported network and then sent to burn addresses.

The plan also includes suspending USDKG smart contracts on Tron and Ethereum and removing the token from centralized and decentralized exchanges. That makes the closure an organized redemption and retirement process rather than a simple halt in activity.

UK sanctions preceded the announcement

The shutdown comes months after action by the United Kingdom against the company behind the project. On May 26, British authorities sanctioned Virtual Assets Issuer, the company later known as EVA.

According to the U.K. sanctions notice, there were reasonable grounds to suspect the company had supported or benefited the Russian government through business of economic significance. The notice also listed USDKG and USDKG.com as associated names.

While that sanctions action casts a clear shadow over the project, the Kyrgyz government has publicly tied the liquidation to state asset-management optimization. The source article does not say the government formally linked the closure to the U.K. measures.

A short-lived sovereign crypto project

USDKG stood out because it combined government backing, a dollar peg and physical-gold reserves in a single stablecoin structure. That made it different from more typical private-sector dollar tokens and positioned it as a sovereign-style digital asset experiment.

Its closure less than a year after launch brings that effort to an early end. The next confirmed steps are the redemption of outstanding tokens, consolidation of balances across supported networks, token burns, suspension of the Ethereum and Tron contracts, and delisting from trading venues.

Source: news.bitcoin.com