New Cryptocurrency Unlikely to Help Russia and Iran Evade Sanctions

It appears that Russia now sees cryptocurrency as a tool for engaging in bilateral trade with Iran, and a way to pay for those drones. By January 2023, the Russian news agency Vedmosti started reporting that the "Central Bank of Iran (CBI) is cooperating with the Russian government to jointly issue a new ‘cryptocurrency backed by gold,’ to serve as a payment method in foreign trade.” The prospective token is described as a “stablecoin backed by gold" that will "enable cross-border transactions instead of fiat currencies like the United States dollar, the Russian ruble or the Iranian rial.”

Vedomosti reportedly notes that the cryptocurrency would operate in a special economic zone in Astrakhan, where Russia has already started accepting Iranian cargo shipments. On the involvement of a special economic zone, Alex Zerden, Founder of Capitol Peak Strategies, a risk advisory firm explained to me, "As identified by the intergovernmental Financial Action Task Force, special economic zones can be misused for money laundering and terrorist financing. This proposal will likely enrich corrupt and malign actors but will create little benefit for those citizens living in these authoritarian regimes."

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