Iran and Russia are reportedly working together to establish a new gold-backed digital currency that will help each nation avoid sanctions imposed by the United States. Many experts are saying this is easier said than done, and that building such a currency – much less living and breathing by it – will be very difficult to do. Russia and Iran Have Formed a Crypto Bond Russia has allegedly reported that it wants to utilize the cryptocurrency to engage in bilateral trades with Iran. The latter region has given Russia access to drones, which it has allegedly used in its ongoing fight against Ukraine and paying for the drones with crypto seems like a valid route to take for Russian regulators. In a statement, Russian news agency Vedmosti stated: [The] Central Bank of Iran
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Iran and Russia are reportedly working together to establish a new gold-backed digital currency that will help each nation avoid sanctions imposed by the United States. Many experts are saying this is easier said than done, and that building such a currency – much less living and breathing by it – will be very difficult to do.
Russia and Iran Have Formed a Crypto Bond
Russia has allegedly reported that it wants to utilize the cryptocurrency to engage in bilateral trades with Iran. The latter region has given Russia access to drones, which it has allegedly used in its ongoing fight against Ukraine and paying for the drones with crypto seems like a valid route to take for Russian regulators. In a statement, Russian news agency Vedmosti stated:
[The] Central Bank of Iran (CBI) is cooperating with the Russian government to jointly issue a new ‘cryptocurrency backed by gold,’ to serve as a payment method in foreign trade.
Alex Zerden – founder of Capitol Peak Strategies, a risk advisory firm – threw his two cents into the mix, commenting:
As identified by the intergovernmental Financial Action Task Force, special economic zones can be misused for money laundering and terrorist financing. This proposal will likely enrich corrupt and malign actors but will create little benefit for those citizens living in these authoritarian regimes.
Present sanctions imposed by the U.S. have cut countries like Russia and Iran off from exports and specific financial tools. Thus, crypto could potentially be utilized to engage in trade and garner needed supplies. Russia has long been attempting to use crypto to avoid sanctions as we’ve reported since the start of the Ukraine war, but there are many financial analysts out there who say this new cryptocurrency poses several new problems.
A big one is an apparent lack of liquidity. Zerden mentioned:
This novel proposal to misuse emerging technologies appears as a desperate measure by two brutal, authoritarian regimes to not just evade sanctions, but likely facilitate money laundering and corruption which plague both countries and undermine a transparent global financial system.
Senior Treasury Official Todd Conklin also commented that Russia has not established the means to build such a currency, nor has it focused enough on blockchain applications to be able to employ the measures necessary for accepting a gold-backed cryptocurrency. He stated:
Russia is a G20, fiat-based economy, and now the ruble is at a record low. Russia has not focused on building the rails needed to support crypto or defi [decentralized finance] innovation. You can’t flip a switch overnight and run a G20 economy on cryptocurrency.
Will This Be Difficult to Do?
Prior to invading Ukraine, the nation of Russia conducted roughly 80 percent of its transactions in fiat currency.
In any case, so long as sanctions exist, there will likely be digital attempts to get past them.