The financial relationship between Iran and Russia has been the subject of much discussion lately, with both nations exploring the possibility of a stablecoin backed by gold as a means of payment for cross-border settlements. The matter was raised by the chairman of the Financial Market Committee at the Russian parliament, Anatoly Aksakov, during a recent visit to Iran where the proposal was received with interest from the Iranian side.
Why a Stablecoin Backed by Gold?
The reason for this proposal is simple: Iran has a large debt for goods supplied by Russia, and the Iranian currency, the rial, fluctuates significantly, making it inconvenient for Russian exports. The use of a stablecoin backed by gold would provide a stable means of payment and eliminate the need for conversions into different currencies.
The Proposal Discussed
“We discussed the issuance of stablecoins, digital financial assets (DFAs) backed by certain valuables. For example, I spoke about gold, gold bars, refineries can provide them, or centers where gold is stored, and DFAs are issued against these reserves,” said Aksakov, who explained that such a stablecoin can then be used as a means of payment for bilateral trade between Russia and Iran.
Gold-Backed Stablecoin First Proposed in 2019
The idea to issue a Russian gold-backed stablecoin was initially discussed in May 2019, during a meeting at the Russian State Duma. At the time, the member of the house Vladimir Gutenev suggested that the central bank should initiate talks with other BRICS countries to explore the possibility of a “golden ruble” stablecoin. The proposal was also featured in a report by the VEB.RF Institute for Research and Expertise released in the summer of 2022.
Iran’s Interest
The proposal has been received with interest from the Iranian side, as they look for ways to bypass Western sanctions. In August 2022, Iran placed its first official import order using cryptocurrency, and the central bank is reportedly mulling over developing a gold-backed token with Russian participation.
Russia’s Move to Legalize Crypto Payments
Russia is also exploring ways to legalize cross-border cryptocurrency payments, with a digital ruble and a crypto rial under development. This move towards the legalization of digital currencies is a response to the pressing need to find alternative means of payment in light of Western sanctions.
Conclusion
The use of a stablecoin backed by gold would provide a stable and secure means of payment for Iran and Russia, as they look for ways to bypass Western sanctions and streamline their financial relationships. The proposal has been well-received by both nations, and the development of a gold-backed stablecoin could potentially pave the way for wider adoption of digital currencies in international trade.
