Promoting Gold-Backed Stablecoin, Inviting CZ as Web3 Advisor
The Central Asian country of Kyrgyzstan is quietly rising as a noteworthy nation for exploring crypto innovation.
On April 15, the Kyrgyz government officially announced that the National Investment Agency, directly under the President, has signed a strategic Memorandum of Understanding (MoU) with Binance founder Zhao Changpeng (CZ), formally appointing CZ as an official advisor on national blockchain development, cryptocurrency regulation, and Web3 innovation. This news was confirmed earlier on April 3 by Kyrgyz President Sadyr Zhaparov on the X platform.
CZ Officially Hired as Advisor, Accelerating Kyrgyzstan’s Blockchain National Strategy
According to the signed Memorandum of Understanding, CZ will provide forward-looking framework guidance for the Kyrgyz government in the field of digital assets, including technical support for blockchain infrastructure and policy formulation. This cooperation will also focus on talent cultivation and accelerate the construction of an innovative environment for DeFi and Web3 technologies.
Interestingly, on April 4, in response to community rumors that “Kyrgyzstan is planning to lead the establishment of a national cryptocurrency exchange and will allocate two buildings for trading halls,” CZ clarified on the X platform: “No buildings were allocated; what digital currency exchange needs buildings for trading halls?”
On April 7, President Sadyr Zhaparov replied, “I have been busy with the Central Asia-EU summit these days, and finally had time to read the comments today. I am really happy to see everyone’s interest in Kyrgyzstan! Someone mentioned in the comments that there was a promise to cooperate in building a building. I am not sure who promised what to whom—but if Binance needs a building, we will ensure that there is one.”
Although whether to co-build an office building remains unconfirmed, the cooperative relationship between the two parties has clearly intensified.
According to the official announcement, the signing of this memorandum aligns with Kyrgyzstan’s overall strategy to modernize its financial system and create a regional digital innovation center. According to the official statement from the president’s office, the development of blockchain and digital finance has been prioritized as a national priority.
“We welcome global leaders with profound expertise who can assist in building a forward-looking and secure ecosystem,” said Kyrgyz President Sadyr Zhaparov. “Blockchain and digital finance are areas of national priority, and this cooperation marks a significant step forward for us.”
In addition to regulatory efforts, the Memorandum of Understanding also proposed several supportive measures covering education, workforce training, and cross-border knowledge exchange in blockchain-related fields. These initiatives aim to promote the development of the national entrepreneurial ecosystem and align Kyrgyzstan’s virtual asset regulation with global best practices.
This cooperation is backed by Kyrgyzstan’s continuous efforts to promote the development of crypto finance over the past three years. Since the enactment of the “Virtual Assets Law” in 2022, which established a clear legal framework for crypto activities, the country has demonstrated its readiness for cryptocurrency adoption by launching a national crypto bank and integrating blockchain technology into its banking system, digital payments, and financial regulation. According to Kyrgyz law, Bitcoin is regarded as a commodity rather than a security or currency. Mining, buying, and trading Bitcoin on local commodity exchanges are all legal. However, using Bitcoin as a currency in domestic settlements is restricted.
According to a report by the Central Asia Times on January 7, 2025, interest in cryptocurrency among Kyrgyz individuals and enterprises is rising, yet overall market regulation remains weak.
“Given the rapid development of digital technology and cryptocurrency, establishing a crypto bank has become an urgent need to incorporate crypto assets into the country’s traditional financial system,” stated the Kyrgyz Ministry of Economy and Commerce.
The ministry believes that establishing a licensed crypto bank would help address these challenges and improve market transparency, trust, and financial security. Through this initiative, Kyrgyzstan aims to attract foreign investment, promote technological innovation, and provide citizens with secure, regulated channels for cryptocurrency use.
Kyrgyzstan’s strategy focuses on “licensed crypto banks,” which is unique. These institutions will operate under a strict regulatory framework to ensure system transparency and security.
The decision to promote the establishment of a licensed crypto bank stems from a strong emphasis on risk control. These institutions will comply with stringent regulations to protect user funds and personal data. Additionally, regulatory intervention will also help combat money laundering, fraud, and other illegal activities. By incorporating cryptocurrencies into the banking system, Kyrgyzstan hopes to provide modern financial services to underserved populations.
Kyrgyzstan has imposed taxes on crypto mining. The country levies a tax rate of 10% on electricity costs for cryptocurrency mining activities, which includes value-added tax and sales tax. According to the Ministry of Finance, from January to November 2024, Kyrgyzstan collected a total of 46.6 million soms (approximately 537,000 USD) through crypto mining taxes, which is nearly half of the total amount for the entire year of 2023.
Launching Gold-Backed Stablecoin, What Highlights Does USDKG Have?
In addition to regulatory and policy efforts, Kyrgyzstan is also exploring the combination of technology and assets. An important case is the launch of the gold-backed stablecoin USDKG, a stablecoin project supported by the Ministry of Finance and anchored in gold reserves, considered one of the pillar projects in Kyrgyzstan’s blockchain strategy.
In a recent AMA, the project’s two advisors, William Campbell and Gabriel Guerra, provided a more detailed introduction to the project. The credibility of USDKG comes from its state-supported structure. The stablecoin is issued only based on newly added gold reserves, preventing arbitrary issuance and inflation risks. The initial gold collateral is valued at 500 million USD, expected to increase to 2 billion USD within 24 months, further consolidating its long-term stability.
Transparency is a core principle in the design of USDKG. Every USDKG is supported by physical gold, stored in audited secure vaults. Regular third-party audits and a publicly accessible reserve certification system ensure complete transparency, distinguishing USDKG from private stablecoins that have been questioned due to opaque reserve management.
The spokesperson clarified the role of the state in this project. “The role of the Kyrgyz Ministry of Finance is limited to providing gold reserves. The rest of the development, auditing, and maintenance are carried out by private companies and individuals,” Campbell clarified.
USDKG will initially launch on Ethereum and plans to expand to other chains as adoption increases. “We are creating an international asset, with the long-term vision of competing with major stablecoins like USDC and USDT,” Campbell stated.
USDKG is not only a means of storing value but also aims to become an important tool for trade, cross-border transactions, and remittances. For a country like Kyrgyzstan, which heavily relies on overseas remittances, USDKG provides a low-cost, high-efficiency alternative to traditional banking. Furthermore, USDKG is designed to operate on both centralized and decentralized exchanges, ensuring its wide accessibility and use by institutions and individual users.
Kyrgyzstan’s stablecoin is positioned as a solution for cross-border payments, as remittances account for about 30% of the country’s GDP. By integrating into the financial ecosystem, USDKG enables instant, low-cost international transactions, making it easier for overseas workers to remit money home.
The first step in integrating USDKG into the local financial system will be to connect it to Kyrgyz banks and institutions, making it legal tender in the country. Once this foundation is established, it will expand to other Central Asian markets. “The Central Asian market is undoubtedly a target, but we are also interested in Southeast Asia and the Middle East, where gold backing holds significant economic and cultural value,” Guerra stated.
USDKG will also be listed on global cryptocurrency exchanges, allowing activities such as lending and yield farming. According to Campbell, users will have three redemption options: “Anyone holding USDKG can exchange it for physical gold in Kyrgyzstan, convert it into cryptocurrencies like USDT, or withdraw fiat currency through the traditional banking system.”
Competing with Neighboring Countries, Crypto Regulatory Framework Becomes a New Focus of Economic Policy in Central Asian Countries
It is worth mentioning that Kyrgyzstan is not the only Central Asian country stepping into regulatory exploration. A member of Kazakhstan’s lower house of parliament recently called for the government to establish a national crypto bank as a centralized platform for legitimate digital asset custody and trading. Legislator Azat Peruashev stated that the lack of clear regulatory infrastructure has led to a rise in illegal crypto activities, with most transactions occurring outside the official regulatory framework. He believes that institutions led by the state would help curb tax evasion, fraud, and capital outflows through unregulated platforms.
Peruashev proposed that national banks and licensed financial institutions should participate in the project, defining it as a necessary measure to address the widespread abuse of crypto assets. He cited unofficial data indicating that up to 90% of crypto transactions in Kazakhstan occur in the “gray area,” with substantial capital flowing out of the country unchecked.
Meanwhile, Uzbekistan has legalized crypto trading and established a national regulatory mechanism to manage the industry. Another future development to look forward to is whether Kyrgyzstan will follow El Salvador’s example by adopting Bitcoin as legal tender, as regulatory clarity and a friendly attitude toward cryptocurrencies are established.
The accelerated investment by multiple Central Asian countries in the crypto industry and related regulatory policies marks a shift in national attitudes toward digital infrastructure—it is no longer just a financial tool but is seen as a means of national governance. Blockchain technology is being integrated into the overall planning of national modernization and geopolitical strategy, and further developments are worth monitoring.
This article is a collaborative reprint from: PANews