Russia and Iran to Launch a Stablecoin Backed by Gold

By IndraStra Global News Team

Cover Image Attribute: Image by WorldSpectrum from Pixabay

According to reports, Russia and Iran are collaborating to launch a cryptocurrency backed by gold, with the idea that the "stablecoin" could replace the US dollar in international trade. A stablecoin is a type of cryptocurrency pegged to the value of a fiat currency or other assets, such as gold or real estate. The idea behind stablecoins is to provide a digital currency that is less volatile than traditional cryptocurrencies like Bitcoin, which can experience significant price fluctuations.

On January 16, the Russian news agency Vedomosti reported that the two sanctioned nations intend to issue a "token of the Persian region" for international transactions. The intention is to launch it in a special economic enclave in the southern Russian city of Astrakhan, which handles Iranian shipments. Typically, these payments are made in government-issued currencies like the US dollar, Russian ruble, and Iranian rial.

According to a leading Moscow lawmaker, the joint project cannot move forward until Russia's market for digital assets is fully regulated. In September, the Bank of Russia acknowledged the need to legalize cryptocurrencies for international payments to mitigate the effects of financial sanctions. Still, it has yet to elaborate on its plans.

In recent months, Russia and Iran have accelerated their efforts to "de-dollarize" or move away from using the US dollar in trade, according to the Jamestown Foundation. Instead, they intend to increase their annual trade volume to $10 billion through measures such as developing an alternative to SWIFT, which they are prohibited from using.

Even though it soared more than 12 per cent in 2022 due to Federal Reserve interest rate hikes, the US dollar retains its position as the most important currency for trade and foreign reserves. Analysts assert that a trend toward de-dollarization has begun. This appreciation makes business more expensive for buyers holding less robust currencies and as countries seek to reduce their exposure to the United States.

China has begun to advocate for the yuan to replace the dollar in oil transactions, given its increased trade with Russia since the invasion of Ukraine. As a result, the rise of the so-called petroyuan could expand its influence in crude transactions throughout Asia.

Meanwhile, Russia and China have collaborated on an additional de-dollarization initiative. President Vladimir Putin stated in June that Russia was seeking to create a new reserve currency with the other BRICS nations.

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