Just a few years ago, the idea of a digital currency backed by precious metals might have sounded like a quaint idea from a sci-fi movie. But now, the debate over the superiority of gold-backed stablecoins over US dollar-backed stablecoins is starting to take on a very real dimension.
Bitcoin advocate Max Keiser has been adamant that gold-backed stablecoins would be more reliable and eventually outperform the dollar in international trade. This isn’t just lip service—there’s a lot of logic behind it.
A stablecoin backed by Gold would out-compete a USD-backed stablecoin on world markets: Russia, China, Iran should take note.
It would track inflation The USD does not. You’re guaranteed to lose purchasing power.
The USD has no volatility, but again, you are guaranteed to…
— Max Keiser (@maxkeiser) March 22, 2025
Why Gold-Backed Stablecoins Might Win Global Trust
Simply put, gold has been used as a medium of exchange across cultures for thousands of years. Unlike dollars, gold can’t be printed at will by central banks. Gold naturally reflects inflation because its supply is limited. The US dollar, meanwhile, is stable in nominal terms, but its value is steadily eroding over time.
You may not see the price fluctuations on your app screen, but your purchasing power is slowly dwindling like an ice cream cone left on your car dashboard in broad daylight.
Furthermore, Keiser said that countries like Russia, China, and Iran are unlikely to rely on dollar-backed stablecoins, given the ongoing geopolitical conflicts. In this context, gold-backed stablecoins could be a neutral and more globally accepted middle ground.
Kyrgyzstan Bets on Gold With State-Backed USDKG
As it turns out, Keiser’s statement seemed to find validation in the news that came a few days ago. CNF reported that Kyrgyzstan officially launched USDKG, a new stablecoin that is fully backed by gold and guaranteed directly by the state. The goal? Providing a more stable digital exchange tool, with a real foundation in the form of national gold reserves.
Kyrgyzstan’s move is like a subtle slap in the face to countries that are still sticking to fiat-based stablecoins. For many, this kind of stablecoin provides a stronger sense of security. If people usually say “as safe as cash,” maybe now we will hear “as safe as gold” more often.
BITCOIN Act Sparks Gold-Backed Thinking in Washington
On the other hand, the United States seems to be starting to realize that their old approach may no longer be relevant. On March 21, 2025, Bo Hines of the President’s Advisory Council on Digital Assets stated that the government is considering revaluing old gold certificates as a way to increase the country’s Bitcoin holdings without widening the deficit.
The idea stems from the provisions of the BITCOIN Act 2025, which seeks to make Bitcoin part of the national strategic asset.
This move suggests that the US government is starting to take the relationship between gold reserves, Bitcoin, and the stability of the digital economy more seriously. Although the issuance of a gold-backed stablecoin may not necessarily follow, this move clearly signals the arrival of a new era.
Frozen Funds: When Stablecoins Don’t Reach the Market
However, most of the stablecoins in circulation today are still based on dollars, and ironically, this is making the market difficult.
According to the CNF, most of the stablecoins kept in circulation are derivatives even if their supply keeps increasing. Funds are thus not really pouring into spot trading, which would assist to lower volatility and boost liquidity.
To put it in an analogy, it’s like having a big bucket of water but putting it in the freezer. The water is there, but it can’t be used to water the drought-stricken plants. The spot market is currently lacking demand, and the “frozen” stablecoins in derivative form only make things worse.