BISHKEK (Reuters) -Kyrgyzstan has launched over $50 million worth of its national stablecoin, USDKG, backed by gold and pegged to the U.S. dollar, the country’s financial regulator said this week.
Separately, the government on Wednesday ordered a nationwide shutdown of crypto mining amid a worsening electricity shortage.
Kyrgyzstan, a mountainous former Soviet republic of around 7 million people, has tried to position itself as a cryptocurrency leader in Central Asia, even as Western countries have sanctioned Kyrgyz crypto companies they say are aimed at facilitating sanctions evasion by Bishkek’s close ally, Russia.
Kyrgyz President Sadyr Japarov, a populist and nationalist who has taken a generally pro-Moscow line on the Ukraine conflict, has appealed to Western countries not to “politicise the economy” with sanctions.
The regulator said 50,140,738 USDKG tokens were issued on Oct. 31 at a nominal value of $1 each. The issuer is a state-owned company controlled by the finance ministry.
Backed by gold reserves and pegged 1:1 to the dollar, USDKG is intended for cross-border payments and international trade. The Finance Ministry previously said it plans to allocate $500 million to back the token, eventually increasing reserves to $2 billion.
CRYPTO MINING HALTED TO SAVE POWER
Energy Minister Talaybek Ibraev said all Kyrgyz crypto mining farms have been disconnected from the grid to conserve power, citing critically low water levels at the country’s main hydroelectric power plant.
Cryptocurrency mining consumes large amounts of energy. The government has introduced consumption limits and energy-saving measures and plans to import electricity from neighboring countries, including Russia.
(Reporting by Aigerim Turgunbaeva, Writing by Felix Light, Editing by Alexandra Hudson)
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