Stablecoin Backed By Gold To Be Reportedly Launched By Russia And Iran

To higher enable international transactions, the governments of Russia and Iran are reportedly considering working together to develop a brand new stablecoin.

Iran is working with the Russian government to create a “token of the Persian Gulf region” which may be used as a type of payment in international trade, as reported by the Russian news portal Vedomosti.

In keeping with Alexander Brazhnikov, director of the Russian Association of Crypto Industry and Blockchain, the token would likely be issued as a stablecoin backed by gold.

The stablecoin shall be utilized in a free trade zone in Astrakhan, where Russia has began accepting goods from Iran.

For Business, Cross-Border Transactions

Assuming it ever involves fruition, the planned stablecoin will replace fiat currencies just like the US dollar, the Euro, the Russian ruble, and others in cross-border commerce.

Bitcoin (BTC) and Ethereum (ETH) are usually not recognized as legal tender in Russia, and their use as a type of payment isn’t endorsed by the country’s central bank.

On the opposite side, it opens the door for the usage of cryptos in business transactions, including cross-border exchange.


What Is A Stablecoin?

A stablecoin is a cryptocurrency whose value is anchored to that of a fiat or commodity money or another stable asset.

The excessive volatility of Bitcoin (BTC) and other outstanding cryptocurrencies has rendered them unsuitable for on a regular basis transactions, but stablecoins try and provide a more stable alternative.

A combined stablecoin effort, as noted by Russian politician Anton Tkachev, a member of the Committee on Information Policy, Information Technology, and Communications, is unlikely until the digital asset market in Russia is totally regulated.

The Russian lower house of parliament has repeatedly vowed to start regulating crypto transactions this 12 months, but has been repeatedly delayed.

Tkachev said:

“I can assure everyone that we are going to definitely have crypto as a legal product next 12 months, there will certainly be laws… I can only say unequivocally that it can’t be utilized in the Russian Federation as a method of payment for internal settlements.” 

As a response to Russia’s annexation of Crimea and invasion of eastern Ukraine, EU officials passed a law making it illegal for European firms to supply cryptocurrency-related services to Russian residents.

The Growing Stablecoin Market

In comparison with roughly $30 billion originally of 2021, the total value of stablecoins on issue has increased to around $185 billion by April 2022.

The failure of a big algorithmic stablecoin and the resulting widespread volatility in crypto-asset markets in May 2022 caused the worth of stablecoins on issue to fall to about US$150 billion.

Similarly unfavorable is the Central Bank of the Islamic Republic of Iran, which banned all domestic banks and financial institutions from engaging in crypto-related activities in 2018.

Crypto total market cap at $949 billion on the day by day chart | Chart:

In an effort to guard the reliability of the national energy grid, the federal government has declared war on illegal bitcoin miners and temporarily halted operations for everybody.

In August 2022, Iran made history by importing products value thousands and thousands of dollars with bitcoin.

There was numerous growth within the stablecoin market over the past several years, with much of the motion centering on a small variety of stablecoins pegged to the US dollar.

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