Russia may allow gold-backed stablecoins and crypto mining

Chairman of State Duma Committee on Industry and Trade outlines potential exceptions to Russian crypto crackdown

Since the start of 2022, Russian regulators have become increasingly vocal in their opposition to crypto assets. 

The treat of a ban

Last week, the Central Bank of Russia (CBR) called for a ban on cryptocurrencies, describing them as volatile and widely used in fraudulent activity. 

In a report entitled Cryptocurrencies: Trends, Risks, Measures, the nation’s central bank stated that cryptocurrencies undermine the national economy and damage the ability of regulators to maintain optimal monetary policies. 

Although it did not propose banning the ownership of cryptocurrencies by private citizens outright, the report called for a ban on the issuance, circulation and exchange of cryptocurrencies and on the organisation of such operations in Russia.

The report contributed to the ongoing sell-off in the cryptocurrency market. Over the past week, the crypto market’s total capitalisation has fallen from $2.04trn to $1.51trn (£1.12trn). 

Gutenev comments

In the wake of the report, the chair of Russia’s State Duma Committee on Industry and Trade outlined a number of areas that may survive an crypto asset crackdown. 

Speaking to state-media organisation RIA Novosti, Vladimir Gutenev stated that, although cryptocurrencies should be banned, Russia  could make use of a stablecoin denominated in gold and under state control. He also said that some cryptocurrency mining could be allowed under strict state supervision. 

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Gutenev argued that a gold-backed stablecoin could be similar to a golden ruble and help Russia get around international sanctions. 

Outlining his belief that gold is still fairly undervalued in comparison to national currencies, Gutenev stated that he had already discussed the idea with Elvira Nabiullina, the head of the CBR. 

De-dollarisation

As tensions with the United States have increased in recent years, so have Russia’s gold reserves.

In 2018, the government announced its intention to double its gold mining production, while in 2021 the Finance Ministry allowed the nation’s sovereign wealth fund to invest in gold. 

Having stood at less than 500 tonnes in 2000, Russian gold reserves reached 2,298.53 tonnes in the third quarter of 2021. 

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