Russia Moving Closer to De-Dollarization with Gold-Backed Assets

Paigambar Mohan Raj
Source: The NewYork Times

Sber (previously known as Sberbank), the largest bank in Russia, has announced its first release of digital financial assets (DFA) backed by gold. In an attempt to move towards de-dollarization, the bank views DFAs as a “great alternative” to investments. The move comes amid global financial sanctions on the country, following its invasion of Ukraine.

Solfer, a producer and supplier of diverse metals, is the first investor in Russia to acquire the issued assets. Gold-backed DFAs are certified financial assets; the price, and volume of which are influenced by gold valuation.

The bank will allow potential investors to purchase up to 150,000 DFAs, per the legal documents of the offering. The new assets will be available for purchase by July 30, 2023. The announcement also highlighted the “high risks” for investors, including “the risk of illiquidity.”

According to Alexander Vedyakhin, the first deputy chairman of the Executive Board at Sber, DFAs are an alternative to traditional investments. Vedyakhin expects the number of corporate clients to increase rapidly. Moreover, the bank plans on expanding its product line of digital financial assets.

Is Russia moving towards Defi and Web3?

The DFA’s current laws went into effect in 2020. However, Russian President Vladimir Putin approved a law outlawing the use of digital currency as payment in July 2022. A division of another state-owned bank in Russia, VTB Factoring, announced its first significant transaction involving digital financial assets in June.

The engineering firm Metrowagonmash’s tokenized debt pool, issued via the fintech platform Lighthouse, was bought by the bank subsidiary as part of the transaction. Later in July, Sber conducted its first DFA transaction test by issuing three-month assets with a market value of about $14.5 million.

Moreover, a few weeks ago, Sber added support for the popular crypto wallet MetaMask.

It is not surprising that the nation is trying to compensate for the sanctions using blockchain-based technologies. Regardless, Russia’s use of decentralized tools is expected to increase in order to uncouple the dollar stronghold.