Crypto Could Help Russia Escape US Sanctions as Country Looks to Gold-Backed Crypto Asset
The use and prevalence of cryptocurrency have led to a number of disruptions within the global economic system such as many large firms being forced to finally adopt crypto, many major retailers finally accepting cryptocurrency and the general public beginning to question the traditional economic structures that have existed until now.
One of the latest structures has been called into question is the dominance of the US dollar as the global currency standard especially by Russia. This comes just as the country is reportedly considering launching its own cryptocurrency backed not by the US dollar, as many of the major ones are, but rather by gold and will be used for cross-border settlement with other countries.
Such settlement is a popular use of cryptocurrency as Ripple has teamed up with several countries in the Middle East to help facilitate this as well as JPMorgan launching a token that will be used for this purpose as well.
Russia has reason to consider this as they are under sanctions from the United States and a gold-backed cryptocurrency could help them break free of the US’s hold on them which is the use of the US dollars as the currency standard.
The idea of this cryptocurrency has been spoken of by Vladimir Gutenev, a Russian State Duma member and he has suggested that tying the value to gold will alleviate certain issues that occur which cryptocurrency and that this will be likely a stable coin.
Breaking the Mold
Russian has significant benefit from this as falling back on their gold reserve could help break the US dollar hegemony globally and also allow them to diversify their foreign exchange and will also make them much less reliant on the US dollar and thus, on the US as a country.
As of now, has been reported by the Central Bank that the country holds $492 billion in gold and utilizing these stores will give them a lot more freedom and power as a nation.
Despite all the potential benefits of this, there has been some pushback towards this potential cryptocurrency from inside the state itself. The head of the Central Bank of Russia (CBR) Elvira Nabiullina said:
“As for mutual settlements, we will consider, of course, a proposal on a cryptocurrency that is tied to gold. But, in my opinion, it is more important to develop settlements in national currencies,”
She also went on to state that the Central Bank of Russia is unsure of cryptocurrency at the moment as it may not be compatible with the monetary system but that a volatility-free digital asset will be much more appealing.
“The CBR, in principle, is opposed to cryptocurrencies being launched into our monetary system. We do not see the possibility that cryptocurrencies fulfill the function of monetary surrogates,” Nabiullina said, adding that “We have prepared an analytical report and will soon present it which will analyze what cryptocurrency is, what is happening in the world, what approaches different countries to have, and what regulation is envisaged. And, if the phenomenon of cryptocurrency in any perspective may cause risks to our macroeconomic stability, we need to understand that.”
However, the regulator would be willing to consider a token that is backed by a tangible asset and the use of gold will help eliminate excessive volatility and will also be a big step in liberating Russia from US influence.