Central Asian nation Kyrgyzstan plans to debut the Gold Greenback, or USDKG, the gold-backed stablecoin pegged 1:1 with the U.S. greenback within the third quarter, mission’s advisor Gabriel Guerra informed CoinDesk on the Token2049 convention in Dubai.
The stablecoin, backed by $500 million in gold from the Kyrgyz Ministry of Finance, is designed to facilitate seamless cross-border transfers in a rustic the place remittances account for 30% of the GDP.
The Ministry goals to increase the gold reserves to as a lot as $2 billion, with impartial audits deliberate to make sure belief and transparency within the collateral backing.
Gold has lengthy been thought to be a extremely liquid, risk-free retailer of worth. Nonetheless, its occasional worth swings pose a possible threat to the steadiness of the stablecoin.
To mitigate this, the stablecoin will probably be overcollateralized, Guerra famous, including that its major use case could be shifting capital throughout borders.
“The stablecoin will probably be utilized in cross-border transactions and worldwide commerce with an preliminary deal with Central Asia and enlargement into Southeast Asia and the Center East deliberate for later,” Guerra mentioned.
Observe that USDKG just isn’t supposed to trace gold costs like USDT or PAXG. As a substitute, it is going to be solely backed by gold reserves and issued and redeemed on a 1:1 foundation with USD, sustaining a steady worth tied on to the worldwide reserve fiat forex broadly utilized in worldwide commerce.
USDKG holders can redeem their stablecoins for bodily gold and different crypto property or withdraw them as fiat forex.
