Iran and Russia want to issue new stablecoin backed by gold

[Hydrogen]

The potential stablecoin aims to enable cross-border transactions instead of fiat currencies like the U.S. dollar, the Russian ruble or the Iranian rial.

The Central Bank of Iran is reportedly cooperating with the Russian government to jointly issue a new cryptocurrency backed by gold.

According to the Russian news agency Vedomosti, Iran is working with Russia to create a “token of the Persian Gulf region” that would serve as a payment method in foreign trade.

The token is projected to be issued in the form of a stablecoin backed by gold, according to Alexander Brazhnikov, executive director of the Russian Association of Crypto Industry and Blockchain.

The stablecoin aims to enable cross-border transactions instead of fiat currencies like the United States dollar, the Russian ruble or the Iranian rial. The report notes that the potential cryptocurrency would operate in a special economic zone in Astrakhan, where Russia started to accept Iranian cargo shipments.

Russian lawmaker Anton Tkachev, a member of the Committee on Information Policy, Information Technology and Communications, stressed that a joint stablecoin project would only be possible once the digital asset market is fully regulated in Russia. After multiple delays, the Russian lower house of parliament once again promised to start regulating crypto transactions in 2023.

Iran and Russia are among the countries that banned their residents from using cryptocurrencies like Bitcoin BTCtickers down
$20,921 and stablecoins like Tether (USDT) for payments. At the same time, Iran and Russia have been actively working to adopt crypto as a tool of foreign trade.

In August 2022, Iran’s Industry, Mines and Trade Ministry approved the use of cryptocurrency for imports into the country amid ongoing international trade sanctions. The local government said the new measures would help Iran mitigate global trade sanctions. Iran subsequently placed its first international import order using $10 million worth of crypto.

The Bank of Russia — historically opposed to using crypto as a payment method — agreed to allow crypto in foreign trade to mitigate the impact of international sanctions. The regulator has never clarified which cryptocurrencies would be used for such transactions though.

https://cointelegraph.com/news/iran-and-russia-want-to-issue-new-stablecoin-backed-by-gold

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Iran and russia want to issue a stablecoin?! This world is becoming crazier by the day.

I would guess their first kneejerk reaction was to simply use gold. Then they realized if they digitized it. They could simply move digital funds from one account to another account. Which is easier and more efficient than shipping heavy piles of gold across long distances. But then who would cover development costs of what could easily become a multi million dollar project? Then they realized, if they used free open source code from crypto projects, they wouldn't have to pay software development costs and would only need servers to run it and personnel to maintain it.

So it seems that crypto and stablecoins may become a natural progression for corporations and nations of the world who are attempting to solve basic and fundamental problems of economy. Such as developing and deploying financial systems to facilitate transactions denominated in gold. Rather than starting from zero and building systems upwards to achieve basic and fundamental financial tasks.

[jackg]

Sounds quite a lot like a desperate long shot though too... Why does Russia need to team up with someone to do this, are they doing THAT badly on their own? I thought they'd have a decent enough development firm for something like this at least, or is this more of a strengthening ties exercise (to which, maybe they don't need the currency anyway).

I thought there was already an Indian company that made digital gold in the past, is that not still a thing (but maybe India seem too neutral and a potential risk for now)?

They probably can't use something too decentralised (like PoW) because it'd either be expensive to run or it would get attacked (it might just get attacked anyway, like Russian TV did regardless of how it's made).

[Smartprofit]

Yes, such a project may well be implemented. 

The Central Bank of Russia has accumulated a very large amount of gold bars.  9 months ago, the sale of gold bars in the Russian Federation was exempted from VAT.  According to legislators, this should have led to the active purchase of gold bars by the Russian population from Russian commercial banks. 

However, the population of Russia did not begin to buy gold bars, but began to buy pasta and canned meat.  In an economic crisis, this is a reasonable decision.  Even taking into account the abolition of VAT, gold bars are a low-liquid and absolutely useless commodity in terms of consumption. 

As for cross-border settlements between Iran and Russia, the gold-backed cryptocurrency is, in my opinion, a pretty good solution.

[Darker45]

Sounds nice, but not really. At this point in time, verifiability has become the basis. Trust is certainly not enough.

Will there be a way for everyone to verify that the stablecoins are actually backed by gold? Apart from that, will there also be a way to verify that all the gold are real gold and not fake? Even China's gold reserves have fake ones.

USDT is not owned by a powerful government and yet it has even managed to issue USD-pegged tokens without a 1:1 reserve. Who will audit Russia and Iran's gold-backed stablecoin? Or should I ask, which auditing firm has the iron balls to refuse a report saying the stablecoin is sufficiently backed by genuine gold even if it's not when KGB and GU and FSB agents are all over your office?

[bittraffic]

There will be the need to audit the gold every now and then otherwise it will end up just like this current fiat system. Maybe they need the whole of Asia to have access to this gold reserve, not just Iran. Iran and part of the Middle East though have tons of gold.

Russia will need more than this promise to back a stablecoin. China I think would be Russia's better half of this system because they were very aggressive in this multipolar system in which the west belongs to the West and the east to the East.

[pooya87]

I'm not sure how to feel about this news, the idiots in our central bank need to get off their printing machines and stop printing fiat to tank the national currency first before they start thinking about creating yet another centralized altcoin.

Iran and Russia are among the countries that banned their residents from using cryptocurrencies like Bitcoin

I don't know about Russia but this is not entirely true about Iran. Although bitcoin is not exactly regulated but it is also not banned in Iran.

I would guess their first kneejerk reaction was to simply use gold. Then they realized if they digitized it. They could simply move digital funds from one account to another account. Which is easier and more efficient than shipping heavy piles of gold across long distances.

Gold is actually being used for a lot of trades over the past 3-4 years at large quantities and over long distances (eg. a plane full of gold bars received from Venezuela for fuel and other stuff Iran sent).

You are overthinking it though. It is just a trend going on all over the world where idiots in banks of all countries are pushing for CBDCs for different reasons. There are hundreds of them in development as we speak!
https://cbdctracker.org/

[bullrun2024bro]

~

As long as this initiative is driven forward by only two internationally relatively isolated states such as Russia and Iran, I can hardly imagine that other countries will join this project. Even if it certainly sounds attractive to some other states.

Of course, it is not only Russia and Iran that are striving to replace the dominance of the US dollar, but whether a stablecoin of their own is the right way to weaken the dollar is highly doubtful, if you ask me.

In addition to that, the question is of course how a stablecoin backed by gold is supposed to work at all. Other states would have to trust Russia and Iran that the gold stored in bank vaults somewhere in Moscow or Tehran would also be issued in case of doubt to support the stablecoin.

So this project is about great trust in the issuers. And this is practically non-existent. After the bloody war that Russia is waging in Ukraine with the help of Iran ofc, I hardly believe that these two states still enjoy a high level of trust in the international community.

To me, the whole idea sounds more like a desperate attempt to somehow replace the dollar.

[stompix]

Sounds quite a lot like a desperate long shot though too... Why does Russia need to team up with someone to do this, are they doing THAT badly on their own? 

Because it's just for show, to show the world they still have a friend, the other pariah state of the world!
The whole thing is hilarious, two of the least trustable countries in the world will think people will sue their coins just because they are signing a piece of paper guaranteeing the coin is backed by something! It's another of those publicity stunts just like every single of their revolutionary products that didn't last a month or never left the planning department!

Sounds nice, but not really. At this point in time, verifiability has become the basis. Trust is certainly not enough.

Will there be a way for everyone to verify that the stablecoins are actually backed by gold? Apart from that, will there also be a way to verify that all the gold are real gold and not fake? Even China's gold reserves have fake ones.

And even if they prove they have the reserves, what does that mean?
You have to trust them that they will sell that gold to prop up the currency and that they will buy more when they issue more, of the same value!
The rial is not turning into toilet paper down because some magical fairy is angry with them, it's because they are printing more than they say, they are flooding the market with currency and faking the exchange rate with fixed ones and because the whole economy is going down in flames, the situation is so laughable that they are asking people to cut gas consumption and shutting down factories while claiming  everything is fine
Iran faces gas shortage despite vast reserves

Who in its sane mind would trust these guys with their gold-backed currency?
Oh, yeah, there are some, the ones that invested in the petro, the other phenomenal oil-backed currency that didn't go anywhere!

Russia will need more than this promise to back a stablecoin

And more than a document like the Budapest Memorandum!

[Ozero]

~

As long as this initiative is driven forward by only two internationally relatively isolated states such as Russia and Iran, I can hardly imagine that other countries will join this project. Even if it certainly sounds attractive to some other states.

Of course, it is not only Russia and Iran that are striving to replace the dominance of the US dollar, but whether a stablecoin of their own is the right way to weaken the dollar is highly doubtful, if you ask me.

In addition to that, the question is of course how a stablecoin backed by gold is supposed to work at all. Other states would have to trust Russia and Iran that the gold stored in bank vaults somewhere in Moscow or Tehran would also be issued in case of doubt to support the stablecoin.

So this project is about great trust in the issuers. And this is practically non-existent. After the bloody war that Russia is waging in Ukraine with the help of Iran ofc, I hardly believe that these two states still enjoy a high level of trust in the international community.

To me, the whole idea sounds more like a desperate attempt to somehow replace the dollar.

It is unlikely that the alleged joint issuance of a stablecoin by Russia and Iran is intended to weaken the dollar. Thus, Russia and Iran are simply trying to circumvent international sanctions. Due to the fact that Iran has begun to supply Russia with its combat drones, as well as in view of the possible supply of ballistic missiles and other military weapons, it is advisable for these war criminals to unite. After all, additional sanctions are now being imposed on Iran for military cooperation with the terrorist country Russia. Russian gold is also subject to sanctions. Therefore, it will be easier to issue a joint gold-backed CBDC here. At the same time, Russia and Iran are likely to focus solely on mutual trade with the help of such a CBDC. Although in the future they may allow changes to these plans. But the war in Ukraine may disrupt these plans of terrorist states.

[coupable]

I doubt that circumventing the sanctions in this way will succeed if it is used only between the two countries to conduct exchanges between them. Companies in both countries are prohibited from using cryptocurrency as their respective legislation prohibits its use.
As I understood from the article, the stable currency will be used in foreign exchanges. But who is concerned with using it other than the two countries? Another important point is the gold reserves needed to create this currency, where will it be obtained from and who will be the authority responsible for developing and launching the currency?

[Hispo]

Am I assuming this will be a case of a centralized token or something like that? Because I tried to find within the article any indication on what blockchain they plan to launch this token and I did not find anything.

Also, the way I see it, the success of this token would depend on the acceptation it would have in the markets and I doubt the United States and the European Union would allow any of their allies and businesses to accept this token as payment method. At best, it could become an standard in Russia, Iran, China and (if they are lucky) in their spheres of power (Venezuela, African countries, etc).

However, China already is pushing their own CBDC...

[hatshepsut93]

So it seems that crypto and stablecoins may become a natural progression for corporations and nations of the world who are attempting to solve basic and fundamental problems of economy. Such as developing and deploying financial systems to facilitate transactions denominated in gold. Rather than starting from zero and building systems upwards to achieve basic and fundamental financial tasks.

How to pay for something is usually the smallest of the problems. Even for Russian and Iran there are their own payment networks, Chinese payment networks, payment networks of other countries that are friendly to them.

And the idea of a gold-backed currency to counter US dollar is not new. It's probably older than Bitcoin. It didn't have a lot of success - https://en.wikipedia.org/wiki/Modern_gold_dinar

[pooya87]

Because I tried to find within the article any indication on what blockchain they plan to launch this token and I did not find anything.

These things are created to be centralized and in full control of the government/bank, they will never be built on top of another blockchain as a token. They will always use their own centralized and closed source software and ledger.
I have heard rumors that the one Iran has developed called CryptoRial (which is another project probably unrelated to the one in OP) is using something called Hyperledger Fabric which some claim is shady as hell despite being open source because of the links those involved in the development have (I haven't fact checked this so take it with a grain of salt).

[avikz]

Some wise man once Said - tokenization is the future! This is one prime example of tokenization. You don't need to move the physical gold, but still you can transfer the value. What else do you need? US lobby needs to be broken for a peaceful world. If it can't be broken, a new lobby should come up to challenge US dominance to maintain balance.

But even if Russia and Iran join hands to create such stablecoin, I don't think that will be made available to the commoners like us. So it will remain a strictly centralized currency system.

[slapper]

Iran and Russia are considering gold-backed stablecoins, which is intriguing. As you noted, many similar blockchain ventures have failed, but a few have succeeded.

A gold-backed stablecoin may sound appealing, yet Bitcoin is often called digital gold. Decentralized, precious, and scarce, it resembles genuine gold. Why wouldn't Iran and Russia accept Bitcoin instead of inventing their own stablecoin? Instead of legalizing bitcoin and developing their own digital money system, they outlawed it to control the economy and its people.

Creating a stablecoin, especially one tied to gold, is a massive undertaking. They must figure out how to make and maintain the stablecoin and demonstrate a clear relationship between gold and the new currency to gain public trust. Launching a new coin may raise legal and regulatory difficulties.

Though I find this new discovery intriguing and wish to learn more about it, I doubt the general public will accept it.

[dansus021]

I believe this project China also included https://news.bitcoin.com/economists-discuss-russia-china-potentially-developing-gold-backed-currency-that-could-undermine-us-dollar/ " Economists Discuss Russia, China Potentially Developing Gold-Backed Currency That Could Undermine US Dollar"

but you guys must know right that back couple of a year ago that fiat is backed by gold  after recession high inflation pandemic etc maybe its time to change the fiat 

[jayce]

The relationship between Russia and Iran becomes stronger after The Ukraine's War, including in economic sector, where the Russian exports to Iran increased by 27%, and the imports 10% ^[1]. They are also figuring out the way to increase their economic cooperation by involving India to avoid sanctions from western countries ^[2]. Actually it's not surprising to see Russian and Iran working on some projects for their partnership, and this stablecoins is one of them. Russia have to maximize the relationship with current allies, and in the other hand, it's a good chance for Iran to get closer with a super power country. Regarding stablecoins, there are so many countries that have applied it already and are still initiating it, as you could see the list here^[3].




[1] https://financialtribune.com/articles/domestic-economy/116385/iran-russia-trade-at-4-billion
[2] https://asia.nikkei.com/Politics/International-relations/Russia-and-Iran-eye-trade-route-with-India-to-bypass-sanctions
[3] https://blog.stomarket.com/list-of-all-central-bank-digital-currency-and-stablecoin-initiatives-1bb6f6d61ea3

[Sithara007]

For the last 2-3 decades or so, I am hearing about this. First it was fiat currencies backed by gold and now it is stablecoin backed by gold. Russia and China have realized that it is not possible to replace the US Dollar with any of the fiat currencies. Other fiats (CNY, EUR, GBP.etc) are in a much worse state when compared to the USD. So for now, gold is the only reliable alternative. But how reliable is gold? The total amount of gold mined out till now is somewhere between 180,000 and 200,000 tons. But there is a lot more gold in the earth's crust, and the only problem is that it is contained in deposits which makes no economic sense to extract. For example, ocean water contains 20 million tonnes of gold.

What will happen in future, in case technology advances to such a level, to make extraction of gold from ocean water economically viable? Or what will happen, if humans are able to travel to other planets or asteroids and mine gold from them?

[Kakmakr]

The thing about Gold is this.....

Many countries have not done independent audits on their Gold reserves, so nobody actually know how much Gold they have. Let's take the Gold that are stored in Fort Knox in the USA.... The last inspection by Members of Congress was on September 23, 1974, since then... the federal authorities who control the US gold reserves at Ft. Knox ....refused a comprehensive audit to be conducted.

There might as well be Gold painted bricks in those vaults, because nobody has tested it.    

Bitcoin is very transparent.... and anyone can do an independent audit on the coins that are stored on the Blockchain. So, I will not trust anything that are hidden in a vault, with no guarantee that it exists.  

[stompix]

The last inspection by Members of Congress was on September 23, 1974,

Make that 2017
https://apnews.com/article/d0e1efce41bb42ba9cdf1f34dc3f7e5c

There might as well be Gold painted bricks in those vaults, because nobody has tested it.    

The same conspiracy theories that make no sense, all that gold stored at Fort Know would be around ~200 billion, just the classified U.S. Defense budget is at ~100 billion, and the US has just issued 1.5 trillion in free money, how hard would have been for them to actually print enough to buy that gold back if it had ever been spent? And why would they spend it in the first place when they can just print billions with ease?

What else do you need? US lobby needs to be broken for a peaceful world.

Yeah right, cause Russia is known for its history of peace and not for land-grabbing wars nearly every decade.
I love how people on Bitcointalk throw all the shit possible at the US while ignoring that right now it's still the best place for development and the top spot in adoption, mining, batms, business accepting and people actually spending it, everything. But no, who cares about that?