The potential stablecoin is intended to enable cross-border transactions in lieu of fiat currencies such as the US dollar, Russian ruble, or Iranian rial.
Creating a stablecoin backed by physical gold, which is tradable even in the face of economic sanctions; this is a project backed by Russia and Iran, both restricted by the international community.
It appears that the Central Bank of Iran is cooperating with the Russian government to jointly issue a new gold-backed cryptocurrency.
According to the Russian news agency Vedomosti, Iran is working with Russia to create a “Persian Gulf region token” that would serve as a method of payment in foreign trade.
A Russian and Iranian Stablecoin to Counter Sanctions
Negotiations are ongoing, according to Anton Tchakev, a Duma member responsible for working on digital issues. With a caveat for now: Russia will only confirm the creation of this asset when the issue of cryptocurrency regulation settles on its territory. As a reminder, last September, Deputy Finance Minister Alexei Moiseev already raised the possibility of using stablecoins with Russia’s allies.
This stablecoin will be backed by gold, such as PAX Gold, the largest such asset, which is currently worth $513 million. The interest is that it will not be based on a sanction-prone fiat currency, such as the dollar. Gold’s safe haven status is also one of the reasons why it would be chosen.
Iran and Russia Playing a Balancing Act
It is worth noting that both Iran and Russia have banned cryptocurrency payments in their respective countries. Their governments are not particularly interested in letting part of the economy slip away. Nevertheless, they still want to capitalize on the technology that underpins crypto assets.
Last August, Iran confirmed that it would now use cryptocurrencies for its imports. Same story from Russia, which announced in September that it was working on a bill on cross-border cryptocurrency payments. In these two countries, the catastrophic falls of the respective fiat currencies have also led to a marked adoption by the population, in order to counter the deleterious effects on their economies.
Iran and Russia: Steps Towards Crypto Adoption
In August 2022, Iran’s Ministry of Industry, Mines, and Commerce approved the use of cryptocurrencies for imports into the country amid ongoing international trade sanctions. The local government claimed the new measures would help Iran ease global trade sanctions. Subsequently, Iran placed its first international import order using cryptocurrencies worth USD 10 million.
The Bank of Russia, which has historically opposed the use of cryptocurrencies as a payment method, has agreed to allow the use of cryptocurrencies in foreign trade to mitigate the impact of international sanctions. However, the regulator has never clarified which cryptocurrencies would be used for such transactions.
This shows that even in territories where populations stay away from cryptocurrencies, these are considered effective enough to be used by governments.
By Audy Castaneda
