US and European Union sanctions have pushed the Iranian and Russian governments to look for an alternative currency in the form of a stablecoin.
Russia is facing strict sanctions from the EU and the US after it waged war against its neighbouring country Ukraine last year. The sanctions lead to the mass exit of top brands including Adidas, Coca-Cola, Starbucks and Heineken, affecting the lives of its citizens.
If this wasn’t enough, the sanctions put severe pressure on the Russian government by forcing other nations to abandon trade with the country on humanitarian and economic grounds. The situation has destabilized the economic health of the nation.
After witnessing a steep fall in exports and imports. Russia has taken a stand alongside Iran to introduce a gold-backed stablecoin which will represent the gold reserve of the country in the form of a stablecoin (like US Dollar under the Bretton Wood system).
The new stablecoin will work similarly to USDT (Tether) which keeps the equal value of US Dollar reserve as against the Tether issued i.e 1 USDT = 1 USD but with a twist of gold against USD.
According to reports, Iran is working with the Russian government to create a “token of the Persian Gulf region” that would serve as a form of payment in foreign trade. This is one of the very interesting situations that has the potential to disrupt the world order if other nations follow suit.
The gold backed stablecoin has the power to overthrow US Dollar’s dominance in the international market while helping these nations evade sanctions at the same time. Last year, Iran has already made its first international import order using $10 million worth of crypto.
Ironically, Iran and Russia are among the countries that banned their citizens from trading cryptocurrencies and digital assets but at the same time using the asset to place international trade orders.
It’s a wait-and-watch situation but if things are put into action, there will be other nations waiting to replicate the success model by ditching US Dollar. Meanwhile, India is pushing Indian Rupee as a new tradable currency in the international market among G20 nations.
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Paras is a blockchain writer & video creator at Katoch Tubes. In his free time, he loves watching space exploration documentaries & Hollywood movies.