Kyrgyzstan is eliminating its state-issued stablecoin.

The government of the Central Asian republic has decided to shut down the Gold Dollar (USDKG) state-backed stablecoin, which was launched by Kyrgyz authorities last November. The project had previously faced accusations of helping Russian authorities circumvent international sanctions. The Kyrgyz Cabinet of Ministers instructed the Ministry of Finance to liquidate the USDKG issuer—a company named "EVA"—and the country's first state-owned crypto exchange, "Coin Nomad Exchange." The official reason cited was the "optimization of state participation in companies and the improvement of state asset management efficiency." Stablecoin holders have been offered the option to exchange their tokens for fiat currency or USDT. USDKG was conceived as the world's first state-backed stablecoin, backed by physical gold and pegged 1:1 to the US dollar. It was issued by the state-owned company "Virtual Asset Issuer," with the Kyrgyz Ministry of Finance as its sole founder. The registered issuance totaled just over 50 million tokens. The token operated on the Tron blockchain. In May, it was listed on the Hong Kong-regulated platform OSL in a USDKG/USDT trading pair. Authorities in the Central Asian republic had positioned the stablecoin as a tool for cross-border settlements and planned to develop the project until at least 2034. On May 26, the UK added "Virtual Asset Issuer" to its sanctions list. British authorities accused the company of conducting business that holds "economic significance for the government of the Russian Federation." The sanctions document listed the USDKG token and the USDKG.com website alongside the company's name. Just two days later, on May 28, the issuer was re-registered under the abbreviated name "EVA." Kyrgyzstan was included in a sanctions package alongside other crypto entities that the United Kingdom linked to the Russian "A7" project and the ruble-backed A7A5 stablecoin. On October 1, the U.S. Department of the Treasury designated A7 a "shadow banking network" used by Iran to evade sanctions. Concurrently, the Office of Foreign Assets Control (OFAC) designated A7 a "significant transnational criminal organization."