In twelve days time, Venezuela will begin a pre-sale on its new oil backed cryptocurrency, El Petro. At a time when multiple governments are cracking down on existing non-state backed cryptocurrencies, Venezuela and Russia have come up with a novel idea of creating state sanctioned cryptos which seek to retain the ease of use and versatility of traditional cryptocurrencies like Bitcoin, but with the added benefit of enhanced stability and moderate regulation that comes from government oversight – something which could become an asset to investors at a time of extreme market volatility.
As Venezuela’s El Petro will be backed by the country’s vast oil reserves, the cryptocurrency will allow international investors to build their portfolio based on a transactional tool that is pegged to one of the world’s most valuable commodities.
Iran which itself has vast gas and oil reserves is considering creating its own energy backed cryptocurrency for largely the same reasons as Venezuela. Both countries have come under heavy US sanctions, yet both are eager to embrace new investment opportunities made possible by the ‘digital multipolarity’ that an energy backed crypto necessarily invites.
While India remains keen on banning the use of cryptocurrencies in spite of their increasing domestic popularity, Iran, appears to be embracing the win-win crypto model that Moscow and Caracas have taken on board.
Russia continues to propose new innovative schemes relating to cryptomining and trading. In addition to rolling out a Crypto-Rouble, Moscow is looking to set up special enterprise zones on either side of the Russian Federation, designed to process offshore transactions in cryptocurrencies. While theoretically, cryptocurrencies are mobile as all transactions are done digitally, the blockchain technology used in cryptocurrency transactions requires a great deal of electricity, making the central location of such trading centres a priority for governments who realise the need to invest in the infrastructural elements of blockchain technology.
The Russian Finance Ministry is currently considering making the Pacific coast city of Vladivostok and Oktyabrsky Island in the Baltic Sea Kaliningrad region, special economic zones for such mega cryptocurrency centres. These strategically placed locations will mean that Russia’s major crypto-trading centres will be easily accessible to both the wider Asian world and wider European world.
As Iran continues to pursue new economic partnerships with Russsia, including in the energy trade, it is within the realm of the doable that Russia and Iran could help one another in establishing further cooperation in respect of creating a pan- Eurasian cryptocurrency. During last year’s BRICS summit in Xiaman China, Russia proposed setting up a BRICSCoin- a cryptocurrency that would ostensibly be based on a digital currency basket shared between China, Russia, India, South Africa and Brazil.
However, because of the diversity of opinions regarding cryptocurrencies within the BRICS, it may be possible and indeed advisable to shift discussions from those revolving around a BRICSCoin to a EurasiaCoin. With Iran set to join the Eurasian Economic Union this year, it is entirely possible that Tehran and Moscow could form the nexus of such a project – one that could easily work in tandem with Venezuela’s El Petro in South America.