Iran and Russia to Work on Stablecoin Backed by Gold
- The Central Bank of Iran and Russia’s central bank will work together to create a gold-backed stablecoin.
- Iran and Russia were collaborating to develop a “token of the Persian Gulf region” to be used as payment in global trade.
- The proposed stablecoin will operate in an Astrakhan special economic zone, where Russia began to accept Iranian cargo shipments.
- The two nations intend to use the stablecoin for cross-border payments which have become a hassle following the US and EU sanctions.
Amid a downtrend in the overall global economy, the Central Bank of Russia is reportedly working with the Central Bank of Iran to jointly develop and issue a new digital currency backed by gold. This sudden announcement comes at a time when Russia’s native fiat currency, the ruble, collapsed significantly in 2022 following the sanctions imposed by the US and EU.
On January 15, Russian news agency Vedomosti published a report that claimed Iran and Russia were collaborating to develop a “token of the Persian Gulf region” that would be used as payment in global trade.
According to the report, the executive director of the Russian Association of Crypto Industry and Blockchain (RACIB), Alexander Brazhnikov, revealed that the proposed token is planned to be issued in the form of a gold-backed stablecoin.
Stablecoins are typically utilized for digital transaction settlements rather than as part of an investment strategy to profit from an asset’s growth. Typically, investors view gold as a secured asset, suggesting they buy it to protect their funds rather than grow them.
Instead of using fiat currencies like the US dollar, the Russian ruble, or the Iranian rial, the stablecoin intends to enable cross-border transactions. The report states that the proposed cryptocurrency will operate in an Astrakhan special economic zone, where Russia began to accept Iranian cargo shipments.
The Committee on Information Policy, Information Technology, and Communications member from Russia, Anton Tkachev, emphasized that a joint stablecoin initiative would only be possible after the Russian digital asset market has been completely regulated. The Russian lower house of parliament once again pledged to start regulating cryptocurrency transactions this year after numerous delays.
Russia and Iran are two of the many nations that prohibit their citizens from making payments with cryptocurrencies like Bitcoin and stablecoins like Tether (USDT). However, at the same time, Iran and Russia have both been constantly supporting the use of cryptocurrency in global trade.
It is interesting to note that amid persistent international trade sanctions, Iran’s Ministry of Industry, Mines, and Trade approved the use of cryptocurrencies for imports in August last year. The new measures, according to the local authorities, will assist Iran in mitigating the effects of international trade sanctions. At the time, the country used $10 million worth of crypto to make its first ever foreign import transaction with digital currency.
On the other hand, even the Bank of Russia, which had previously resisted the use of cryptocurrencies as a payment method, consented to permit them in foreign trade due to heavy sanctions imposed by the European Union. However, the regulatory body has never made it clear which cryptocurrency will be used in such transactions.
As recently reported by BitcoinWisdom, former President of Russia, Dmitry Medvedev, believes that the US dollar and Euro will be replaced by digital currencies and predicted that in 2023 the world will witness the crash of the International Monetary Fund (IMF) and the World Bank.