Russia and Iran are working on project of gold-denominated cryptocurrency
Russia and Iran are working together to launch a gold-denominated cryptocurrency (stablecoin), which will replace the US dollar for payments in international trade.
The Stablecoin are cryptocurrency that source their value from an asset such as the US dollar or gold, and are known to be less volatile in price than crypto assets, protecting investors from extreme volatility in the broader cryptocurrency market.
The countries, which are both subject to Western sanctions, want to issue a cryptocurrency for use in cross-border transactions, and the plan is to launch it in a special economic zone in Astrakhan in southern Russia, which already handles Iranian shipments.
These payments are usually made in government-issued currencies such as the US dollar, Russian ruble and Iranian riyal, but the joint venture will only be able to move forward once Russia’s crypto-asset market is fully regulated, according to a senior Moscow lawmaker.
In September, the Bank of Russia agreed on the need to legalize cryptocurrencies for international payments to mitigate the impact of financial sanctions, but has yet to clarify its plans.
In recent months, Russia and Iran have accelerated their push to halt the dollar’s dominance in trade, aiming to increase their trade volume to $10 billion annually through steps such as developing an international payments system alternative to SWIFT, which is banned from them.
On May 25, Russian Deputy Prime Minister Alexander Novak said that his country and Iran agree to switch to financial settlements in national currencies, stressing that Iranian products can fill vacant markets in Russia.
Novak explained, “Russia has taken the path of lifting the restrictions imposed by import… In this regard, the establishment of trade in national currencies is of particular importance, and the system for transmitting financial messages of the Russian Federation alternative to SWIFT is one of the most reliable systems today, and it needs to be expanded”.
The US dollar is still dominant as the best currency for trade and foreign reserves, despite its rise of more than 12% in 2022, supported by interest rate hikes, which hurt most of the world’s currencies.
