Former Soviet Republic Kyrgyzstan to Issue National Cryptocurrency Backed with Gold

News and Analysis

The government of the former Soviet republic Kyrgyzstan intends to issue a national cryptocurrency backed with gold.

According to Izvestiya, Kyrgyzstan decided to attract private investment for gold mining. In order to accelerate fund raising, the government opted to issue a cryptocurrency backed with gold. The tokens currently known as GoldenRocks will be subject to exchange for gold once the field is developed.

Kyrgyzstan’s prime minister Sooronbay Zhaenbekov appointed local state-owned company Trade House Kyrgyzstan (THK) the project manager. The company will use its facilities to generate tokens. Russia-based company Crypt NN will be the head trader for the forthcoming ICO.

“As the nation state is a shareholder of the THK, the particular options of the ICO are currently being harmonized with the government and the companies from whom we’ve received funding requests, as well as our Russian partners,” Ulan Muskaoulov, advisor for the THK CEO, said.

Some other Russia-based companies might also be involved in the project for technical assistance.

The country’s government intends to raise $5m to $40m over the ICO, which it would later invest in development of the gold mine. If the project works out fine, the government may hold an ICO to fund agricultural projects.

“We believe that we have to provide transparent expenditures monitoring system for our investors, and guarantee return of their investments. Our experts estimate that overall amount of investment in all projects might exceed $500 million,” Mr. Muskaoulov added.

Elina Sidorenko, the head of the Russian Central Bank’s working group for cryptocurrencies, spoke positively of the initiative.

“Their approach is close to the concept of bonds and proves that modern-day digital technologies make a smooth transition from the traditional system of bonds and joint stock companies to ICO built on futures obligations,” she said.

Earlier this week, the National Bank of Kazakhstan, another former Soviet republic, has announced its plans to launch a blockchain platform for short-term liabilities.

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