Persian Gulf Token

Last week, the media reported about the planned cooperation between the Central Bank of Iran and the government of the Russian Federation to develop and issue a common gold-backed cryptocurrency. This solution would be aimed at circumventing the sanctions imposed on these countries by Western countries. Both Iran and Russia do not allow cryptocurrencies for payments by their citizens. However, the sanctions turn out to be so severe that virtual money appears to be the best method for making payments in cross-border trade.

What do we know about the new cryptocurrency? It is clear that it will replace fiat currencies such as the US dollar, Russian ruble or Iranian rial. It would operate only in the designated economic zone of Astrakhan. This is dictated by the fact that Russia has started to accept Iranian cargo shipments in this area. Therefore, this cryptocurrency is tentatively called the “Gulf Token”. Alexander Brazhnikov, executive director of the Russian Association of the Cryptographic Industry and Blockchain, said that the planned token will be issued as a gold-backed stablecoin.

However, it will not be possible to put the issued token into circulation before the full regulation of the digital asset market in Russia. The government has committed to work on the regulations in 2023. The Bank of Russia has already given the green light to make this type of payment in order to mitigate the impact of international sanctions. However, it has not been specified which cryptocurrencies can be used for these transactions.

Meanwhile, last August, Iran approved the use of cryptocurrencies to pay for imported goods that are still entering the country despite sanctions. The law adopted by the Iranian government allows for the relaxation of global trade sanctions. Shortly thereafter, Iran placed its first international import order fully paid for with $10 million worth of cryptocurrency.

Such cooperation will be fruitful for both sides of the project. It is not difficult to see that the Russian arms complex cannot cope with military logistics and that Russia’s invasion of Ukraine is a huge military defeat for Russia. Suffice it to say that the operations in Ukraine were to be carried out in a few weeks and result in the occupation of the entire country. However, Russia’s military operation has been going on for over a year now, and it does not seem that the Russian side is having any success in this conflict. The Russian authorities are therefore forced to use non-standard solutions.

Last year, the media reported on three factories in North Korea that make uniforms, underwear and shoes for the Russian military.

Kiev authorities reported about 300 Iranian-made Shahed-136 drones shot down last year. So Russia needs to make up the losses.

It becomes impossible to pay for these types of orders when sanctions do not allow cross-border payments.

It seems that Russia and Iran are following the global trend of CBDC adoption. Currently, many countries are working on their own cryptocurrencies, which will replace fiat currencies in the future. Although, despite the fact that the work is carried out very intensively, there is still the issue of regulations, which are the main reason blocking very fast adoption on a large scale.