A prominent Russian legislator has proposed the use of digital currencies in the purchase of government arms. According to the lawmaker, this would enable the country to bypass financial sanctions that the West would impose on them. The Member of Parliament, Vladimir Gutenev, who is also the deputy chief of the economy polices committee of the lower house, has urged the Russian administration to cut ties with the US as a resulting of the brooding policy warfare.
Earlier this year, the American government imposed sanctions against Russia because of the country’s involvement in the ongoing civil war in Syria. Later in May, the US sanctioned six Russian enterprises for breaching the weapon of mass destruction non-proliferation treaty. In response to the actions taken by America, Gutenev urged Russia to suspend all agreements that the country shares with the US. Specifically, Vladimir advised Kremlin to ditch the US dollar in favor of digital currencies, as well as avoid using the SWIFT payment processor, a company that has close ties with the American government.
Vladimir added that the cryptocurrencies used in the acquisition of weapons should be backed by gold. He also indicated that other countries, including China and India are likely to follow this path. Gutenev, however, did not issue a detailed explanation on the gold-backed digital currencies. As of now, the most significant coin that is backed by gold is the British Royal Mint Gold (RMG), which is secured by $1 billion worth of gold bars. One RMG is worth its weight in one gram of gold. At the beginning of the year, Australian company Perth Mint created its own gold-backed digital coin.
Coincidentally, Vladimir’s suggestion has come at a time when the Russian president has sanctioned the development of CryptoRuble, a national cryptocurrency. Previously, the president’s economic advisor, Sergei Glavez has lauded digital currencies as subtle means of evading global sanctions. Russia has been condemned for allegedly assisting Venezuela to develop the Petro coin, a digital currency that is backed by the South American country’s oil reserves. To date, Russia has disowned such reports.