'Damn, if this picks up': Zerodha's Nikhil Kamath predicts 'new economic order' with Iran, Russia's gold-backed stablecoin

The Central Bank of Iran is collaborating with the Russian government to launch a new cryptocurrency backed by gold, according to reports circulating in the Russian media, something that Zerodha's Nikhil Kamath said could usher in a "new economic order".

Iran and Russia have joined hands to develop a new cryptocurrency called the "token of the Persian Gulf region". This cryptocurrency would be used as a means of payment in international trade, as per the Russian news agency Vedomosti.

Kamath wondered on Twitter why this news is not getting any coverage from the global media.

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Zerodha co-founder Nikhil Kamath tweeted, "Iran and Russia to issue a new stablecoin backed by Gold. Damn, if this picks up could be day 1, event 1 of establishing a new economic order everywhere. No idea why it's getting no oxygen from the global press."

The Vedomosti report quoted Alexander Brazhnikov, executive director of the Russian Association of Crypto Industry and Blockchain, and said that the new cryptocurrency is expected to be issued in the form of a stablecoin backed by gold. Stablecoins are cryptocurrencies whose value is pegged to an external variable, for example, if a stablecoin is pegged to the Indian rupee with 1:1 parity, this would mean that the value of one unit of the cryptocurrency shall remain Rs 1 and will not change with market volatility.

The stablecoin intends to replace fiat currencies like the US dollar, the Russian ruble, or the Iranian rial, for cross-border transactions. According to the news report, the possible cryptocurrency would function in Astrakhan's special economic zone, where Russia began to accept Iranian cargo shipments.

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Iran and Russia have both been working around ways to evade the US sanctions and the anonymity of cryptocurrency transactions seems to be appealing to them. Iran's Industry, Mines, and Trade Industry approved the use of cryptocurrencies for imports in August 2022. The regional authority claimed the additional actions would assist Iran in lessening international trade sanctions. Iran then used $10 million worth of cryptocurrency to make its first-ever foreign import purchase.

Moreover, the Bank of Russia, which had previously resisted the use of cryptocurrency as a payment mechanism, agreed to permit it in overseas trades to evade sanctions over the Ukraine war.

Interestingly, Russia and Iran both forbade their citizens from making payments with cryptocurrencies.