How a Small Nation Created the World’s First Gold-Backed Crypto Dollar | Cointelegraph Documentary

A new type of digital gold is emerging in one of the world's most remote countries. Can crypto thrive in a rural, cash driven economy? Okay, so cash, cash only at the highest levels of government. A unique cryptocurrency is about to launch. Cointelegraph goes on the ground to find out, could Kyrgyzstan be the world's next crypto frontier? Okay, here we are. Kyrgyzstan, a land of horsemen and snow capped mountains, is making a bold bet on crypto. The country formally legalized virtual assets in early 2022. And just recently, a high profile visit from Binance led to a major agreement with the government, a sign that something big might be on the horizon. You might be wondering, where exactly is this place? Here's a clue. It's in Central Asia, tucked between Kazakhstan and Afghanistan, right near Uzbekistan and Tajikistan. Known for its ancient nomadic traditions and rich natural resources, Kyrgyzstan is laying the groundwork for a new kind of economy, a crypto economy. At the center of this effort is usdkg, the world's first gold backed stablecoin. Pegged one to one to the US dollar, Bitcoin has sparked the crypto revolution. And now countries like Kyrgyzstan are exploring new paths in crypto finance. Hey guys, I'm Giovanni here in Bishkek, Kyrgyzstan. This is the main square of the city and here I met William, who is helping the local government to launch their own stablecoin.

Giovanni, thank you so much for coming, my man. Bishkek is a beautiful city. I want to go horse riding. I want to check out the culture. We're going to talk crypto. Usdkg. Why is the government going fully advanced in the digital technology? Are you ready?

I am. Let's go guys. After months of preparation, we finally got to speak with the key people in the Kyrgyz government, the Prime Minister and the Minister of Finance. This happened just after Binance founder Changpeng Zhao met with the country's president and was appointed to the National Council for the Development of Virtual Assets and Blockchain Technologies. Binance also signed a big partnership deal with Kyrgyzstan. But before we get into all that, let's take a step back. The name Kyrgyzstan comes from the word Kyrgyz, meaning 40 tribes, a reference to the alliance of nomadic clans that once dominated much of Central Asia. Kyrgyzstan sits at the crossroad of the Silk Road, which in ancient times linked China to European markets. When the Soviet Union collapsed in 1991, the country gained its independence. Today, Kyrgyzstan's heritage lives on its busy bazaars where traditional crafts and nomadic culture are still part of daily life. But can this traditional way of life coexist with a fast moving crypto economy? So here we are in the central market of Bishkek. This is called Oski Bazaar and it is one of the biggest markets in the whole country. We are going to to see what's going on here. Maybe we're gonna see if we can pay with crypto.

Let's look. It's the first thing that comes to mind right now is all the microtransactions we need to be paying with USDKG right now.

Hello, sir.

Nice to meet you.

How are you?

Hello. Hi.

What do you, what do you have here? What are all the different things?

What forms of payment do you accept? Can we pay with crypto? Okay, so cash. Cash. Looks good.

Let me see. That looks great.

Another final touch.

Oh, there we go.

Okay, here we are. As we have seen, Kyrgyzstan is still today a cash base society with a large informal economy. Less than 50% of the population had access to banking services as of 2021. However, digital payments have been advancing rapidly. Mobile wallet usage has tripled and the number of bank cards has doubled over the past five years. It was only a matter of time before the country turned its attention to cryptocurrency. In 2022, Kyrgyzstan passed the law on virtual assets, legalizing crypto transactions and creating a regulatory framework for these emerging asset class. Me and William just arrived here at the administration building of Kyrgyzstan. Here is where the Kyrgyzstan government operates and we're going to find out a lot of interesting things about crypto and usdkg.

This is definitely one of the most exciting days. Guys, we're here to talk right to the source. There are a lot of questions I think that have been left unanswered, and today is the day to get to the bottom of this.

What exactly motivated the government of Kyrgyzstan to focus on the digital economy and especially on blockchain technology? Kyrgyzstan tech ambitions are striking, especially for a country that remains largely rural. The majority of the population lives outside the cities, often in mountainous regions that cover nearly three quarters of the country. Here, horses are still a vital means of transport. I even rode one myself for the first time. And honestly, it was a bit terrifying. Yet in cities like Bishkek, tech hubs are starting to take shape, with young developers and entrepreneurs laying the groundwork for a digital economy. Hello.

Welcome to Technopark in Bishkek. Nice to meet you. My name is Aydai. I'm the managing director here. Please. I would like to show you our Technopark, which we launched two years ago. It was opened actually in March 2023. But now this is a two floor, 14,000 square meter hub where we created 1,500 working places. We have creators that do animation works that generate billions of views worldwide. That's the example how small Kyrgyzstan can be part of the global IT market. And it's right here.

Do you also have crypto companies here?

We have crypto companies here and the amount of them are growing. And we also created here nice phone booths so they can do their calls with all kind of countries day and night. They have all the inside, the electricity, ventilation, everything is available here.

I see that you're not allowed to sleep in there.

No, you cannot sleep here. Yeah. Working only you cannot sleep actually. Yeah. We do have sleeping capsules here for that. Yes.

Wow.

Sector. In 2022, the Government of Kyrgyzstan introduced a licensing system for Virtual Asset service providers, or VASPs, including crypto exchanges and trading platforms. Crypto mining is also regulated with a dedicated tax on mining activities introduced back in 2020. As a result, the country's crypto economy has already seen impressive growth. By 2024, over 100 crypto exchanges were licensed and WASP turnover soared from just $59 million in 2022 to a staggering 4.2 billion. But as crypto adoption grows, so do the risks that come with it. Scams and fraud have become increasingly common. To protect users and improve oversight, the government has tightened KYC and AML requirements for exchange operators and introduced specialized training for law enforcement.

Year back you can simply go and buy USDT and sell usdt, Right? But now you have to proceed with kyc, which is good and it's good for us as well. I mean we know like who is buying and who is selling USDT in big amount. The main issue is that the citizens, they are not aware of what is the cryptocurrencies and how to work with cryptocurrencies.

Right.

Lots of scams is happening in Kyrgyz Republic. We provide trainings for the police because that's very important. I mean to teach them right, so that they will know how to investigate such issues and cases.

With clear regulations now in place, Kyrgyzstan's crypto ambitions are ready to go global. Leading the way is usdkg, a new government backed stablecoin pegged to the US dollar. Most dollar packed stablecoins are only partially backed by cash. Many rely on commercial paper, corporate bonds and other financial instruments, all carrying some degree of risk. USDKG stands apart. It's fully backed by physical gold, a Reliable store of value trusted for thousands of years.

USDKG et pervodars.

Set to launch in Q3 2025. USDKG is designed to move capital seamlessly across borders. But that's just one of its many use cases. It acts as a bridge between traditional finance and crypto, connecting fiat gold and digital assets. It can be used as collateral for loans both in defi and through traditional lenders. And it serves as a currency for the tokenized asset economy of the future, enabling the buying and selling of tokenized assets. USDKG is designed to become the foundation of a new economic model, one built on transparency, trust and fully verified gold reserves. But stablecoin adoption in Kyrgyzstan isn't just a top down initiative. It's also being driven by real demand on the ground. Roughly 1.5 million Kyrgyz citizens live abroad as migrant workers. That's about 20% of the population. Remittances account for nearly 30% of the country's GDP. Increasingly, stablecoins are becoming a popular way to send money home. That's when the practical value of USDKG becomes impossible to ignore. Besides its emerging IT and crypto sectors, one of Kyrgyzstan's greatest untapped assets is its stunning natural landscape. The country offers some of the most dramatic scenery in Central Asia. It's home to Isik Kul, the world's second largest saltwater lake, often called the Pearl of Central Asia. This rugged terrain also presents a unique opportunity for crypto to leapfrog conventional systems, enabling mobile based, low cost digital payments that can reach even the most remote communities. So what do think about this place?

Well, you know, I have been to Bishkek before, but this is so different. This is like a little paradise outside of the city. I'm really impressed with the nature here.

Yeah, it seems that this country has so much to offer in terms of variety of landscapes and nature. You have the mountains, you have the lakes, you have the city.

I don't know if you noticed, but this detail is just like the Kyrgyz flag.

That's amazing. Kyrgyz food is all about filling dishes. Plenty of meat, fresh bread and traditional cheeses. All right, so over there, it's where we were before having an amazing lunch with Kyrgyz traditional food. And now we are here testing another true Kyrgyz experience. Right.

Gio's not ready for it, but we're about to go horse riding. Horse riding is actually part of the national sport. These lovely beasts over here. I don't know, Gio, have you ever ridden a horse?

Before, Actually never. This is my very first time I'm going to be riding a horse. So I'm going to trust my buddy William to show me around how to do it.

I'll take care of you, don't worry. Stay with me. We got some experienced guys over here taking care of us. I don't know if you're ever out here, you guys are going to have to try this out yourselves. This is awesome.

Riding a horse up this mountain was a bit scary, but just look at this view. Totally worth it at the top. William and I had a chat about the state of crypto in this beautiful land.

You know, I wouldn't have thought you come to this place and it's so nature and it's so beautiful. I wouldn't have thought that they were crypto. So seeing the new initiative that they're taking, of course it's going to take time to trickle down into the regular economy, regular businesses and things like that. But the government is going full force. And for a country that's small, landlocked, but for full of natural resources, it's the obvious thing to do. They're really smart about what they're doing.

Yeah. And it feels like these small nations like El Salvador, like Kyrgyzstan, which are sort of actively discovering how to attract additional investment in their countries, they are those more eager to experiment, I would say also to take the most risk, of course. Of course they have to.

Well, guys, we're back. After several action packed days, I'm with Gio again. Gio, what did you think, man, we did so much stuff. I want your true opinion, I want your honest take.

Yeah, it was an incredible trip, guys. I had one of my very first horse rides, actually my first horse ride on a mountain. And that was pretty scary, but it was also quite something. And besides that, incredible food. Oh, yeah. Very good hospitality.

Oh, yeah. Generally speaking, aside from the culture and all the beauty, what we were really here to do is this really a place that's ready for crypto adoption.

I believe that there is a lot of untapped potential in this country when it comes to crypto, especially because the government is taking active steps to integrate crypto in people's life. But not only that, it's trying to make it in accessible way and in a safe way.

Absolutely. All right, guys, see you later.

Kyrgyzstan, a country still deeply linked to its nomadic tradition, is now building a new kind of economy. From the bustling streets of Bishkek to the national government, crypto is gaining real traction with millions around the world. Turning to stablecoins for cross border transactions, USDKG offers a unique solution combining the convenience of the dollar with the trust of gold. Kyrgyzstan is slowly but steadily appearing on the crypto map and USDKG is helping make that connection.