Iran, Russia-issued Stablecoin Backed By Gold Could Establish New Economic Order: Zerodha Co-founder

Zerodha co-founder Nikhil Kamath on Monday said that Iran and Russia’s slated stablecoin backed by Gold could establish a new economic order.

Kamath in his tweet mentioned that the development should have been covered more comprehensively by global press. “No idea why it's getting no oxygen from the global press...,” he said in his tweet.

Stablecoins are decentralised assets, much like cryptocurrencies. But unlike cryptocurrencies, stablecoins are pegged to a reference asset such as a fiat currency (USD, INR, etc.), exchange-traded commodities and other cryptocurrencies. For example, the US’ stablecoin USDC (USD coin) can redeem USD 1 Coin for USD 1.00, giving it a stable price.

According to a report from Russian news website Vedomosti, Iran’s central bank is in talks with Russia to create a new stablecoin which will be backed by gold. This could be used as means of payment in foreign trade settlements which generally happen in terms of the US dollar (USD).

The report also quoted Alexander Brazhnikov, executive director of the Russian Association of Crypto Industry and Blockchain stating that the proposed stablecoin will be backed by gold. It also noted that the stablecoin 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, has said that a joint stablecoin project would only be possible once the digital asset market is fully regulated in Russia.

The reports of Iran and Russia’s plans for a stablecoin backed by gold comes against the backdrop of Russian Finance Ministry announcing earlier this month that they have doubled the holding limits of gold and Chinese yuan within the National Wealth Fund (NWF)