The Bank of Russia is considering a groundbreaking step by exploring the potential development of a new cryptocurrency that's backed by gold.

Serving as the Russian Federation's central bank, the Bank of Russia is evaluating an initiative set to consider a proposal that could involve launching a digital currency underpinned by gold reserves.

Governor Elvira Nabiullina confirmed on May 23rd that the bank's leadership is delving into how this state-backed cryptocurrency might evolve, especially as a tool for facilitating international payments, with a focus on the Eurasian Economic Union (EEU) where Russia is a key player.

Addressing lawmakers in the State Duma, Governor Nabiullina acknowledged that the concept of a gold-supported cryptocurrency was officially under discussion. However, she, along with likely many of her colleagues within the Bank of Russia, emphasizes the importance of strengthening transactions in the national currency over exploring cryptocurrency options.

While the initiative is remarkable, being proposed by one of the world's most influential central banks, Governor Nabiullina and her team maintain a cautious stance toward cryptocurrencies. They are reluctant to endorse the State Duma's crypto token proposal at this point.

\"We generally resist incorporating cryptocurrencies into our economic framework,\" explained the governor, \"and we do not foresee cryptocurrencies filling the role of actual currency substitutes.\"

Zooming out, the Bank of Russia is essentially fulfilling its official responsibilities by scrutinizing this recent proposal from the Duma. If things were solely up to the central bank, such an analysis might have been delayed as it prioritizes other critical matters.

Yet, this moment does highlight a significant procedural milestone—embarking on considerations for a unique cryptocurrency is relatively new in the early days of cryptoeconomics.

It's not the first time the State Duma has ventured into the crypto realm, having been investigating the creation of a digital ruble, commonly referred to as a \"cryptoruble,\" since the previous autumn—a project aimed at adding stability while addressing the volatility witnessed in recent years.

A Coin for a Bloc

The dialogue about a cryptocurrency tailor-made for the Eurasian Economic Union isn't a novel phenomenon in Russia.

As reported last December, deputy finance minister Alexey Moiseyev declared a collaboration with the other four EEU member countries—Armenia, Belarus, Kazakhstan, and Kyrgyzstan—toward the inception of a digital currency for the union. negotiate throughout 2019 The deputy minister mentioned the prospect of launching this initiative in either 2020 or 2021, describing the action as \"unavoidable\" amidst economic sanctions from Western countries, particularly the United States.

The core of the idea hinges on developing a cryptocurrency that enables Russia and its influential trading allies to gain more economic independence while reducing dependency on U.S. dollar transactions.

Currently, details on the architecture of this proposed crypto—such as which blockchain it would operate on and its specific features—remain undetermined.

Thinking beyond gold, there's also talk of the potential for an oil-backed digital currency.

In the past, former Russian energy minister Igor Yusufov pitched the concept of a cryptocurrency backed by oil as a strategic way for nations like Russia to circumvent sanctions.

According to the energy sector expert, an oil-pegged cryptocurrency could enable oil producers to bypass increasingly stringent financial constraints and boost their oil and natural gas exports.

Last fall, Yusufov said:

Although now in the private industry, Yusufov's remarks underscore growing interest among influential Russian figures in the viability of cryptocurrencies.

William M. Peaster, a seasoned writer and editor, covers Ethereum, Dai, and Bitcoin developments within the cryptosphere. His work has appeared in outlets such as Blockonomi, Binance Academy, and Bitsonline, among others. Interested in smart contracts, DAOs, dApps, and the Lightning Network, he's also learning Solidity. You can reach him on Telegram at @wmpeaster.