On Monday, Russian news outlet Vedomosti reported that the Central Bank of Iran may collaborate with Russia in creating a gold-backed Persian token to use the digital currency for overseas payments and circumvent sanctions.

The news report acknowledged that the stablecoin initiative is driven by Iran and would have to wait for Russian cryptocurrency regulation. In fact, Russia already has legislation covering real-world tokenized assets, Digital Financial Assets. However, they are generally based on private blockchains and are not intended to be used as payment substitutes. Precious metals, including gold, have already been tokenized using these laws, such as Sberbank and Norlisk’s Atomyze.

Astrakhan is a special economic zone in Russia that plans to start receiving cargo from Iran, and this is where the use of the gold token could target.

In November, Vladimir Putin suggested creating a hawala-like non-bank payment system to get around sanctions.

However, both the Vedomosti report and a Moscow-backed RIAMO report poured cold water on the Iran-Russia idea. One aspect is the legislation or lack thereof in Russia. Another is that Iran is more advanced in its cryptocurrency infrastructure, such as exchanges and brokers, but Russia is not. So far, there is little trade between the two countries, so there is some question as to whether it is worth all the effort, and therefore financially viable.

“For our country, this is a very vague perspective. And in the Astrakhan special economic zone, this will not work because there is no legislative support,” said Yuri Pripachkin, president of the Russian Association of Crypto Industry and Blockchain, speaking to RIAMO.

Arseniy Poyarkov, a member of an expert council advising the State Duma, pointed to better use of resources when several countries agree to use a single platform for settlements, increasing transaction speed and transparency. This sounds similar to some of the cross-border CBDC initiatives, like MBridge, that China is involved in.

At that point, the Central Bank of Russia is advancing its central bank digital currency (CBDC) work. We reported last week that it plans to start exploring cross-border CBDC work this quarter.