Blockchain for Banking News

Report of Russia, Iran using gold backed digital currency may be overstated

gold token blockchain iran russia

On Monday, Russian news outlet Vedomosti reported that the Central Bank of Iran might collaborate with Russia on the creation of a Persian token backed by gold to use the digital currency for foreign payments and sidestep sanctions.

The news report acknowledged that the stablecoin initiative is driven by Iran and would have to wait for Russian cryptocurrency regulation. In fact, Russia already has legislation covering tokenized real world assets, Digital Financial Assets. However, they are usually based on private blockchains and not intended to be used as a payment surrogate. Precious metals, including gold, have already been tokenized using these laws, such as by Sberbank and Norlisk’s Atomyze.

Astrakhan is a special economic zone in Russia that plans to start receiving cargo from Iran, and this is where the gold token’s use might be targeted.

In November, Vladimir Putin suggested the creation of a non-bank payment system similar to hawala to get around sanctions.

However, both the Vedomosti report and another from Moscow-backed RIAMO poured cold water on the Iran-Russia idea. One aspect is legislation or lack thereof in Russia. Another is that Iran is more advanced in its cryptocurrency infrastructure, such as exchanges and brokers, but Russia is not. So far, there is little trade between the two countries, so there’s some doubt about whether it’s worth going to all the effort and hence financially viable.

“For our country, this is a very vague prospect. And in the special economic zone in Astrakhan, this will not work, because there is no legislative support,” said Yuri Pripachkin, president of the Russian Association of Crypto Industry and Blockchain, talking to RIAMO.

Arseniy Poyarkov, a member of an expert council that advises the State Duma, pointed to a better use of resources when several countries agree to use a single platform for settlements, increasing the speed of transactions and transparency. This sounds similar to some of the cross border CBDC initiatives, such as MBridge, in which China is a participant.

On that point, the Central Bank of Russia is progressing its central bank digital currency (CBDC) work. We reported last week that it is planning to start exploring cross border CBDC work this quarter.

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