Gold Backed DFA - A Russian Deathblow To The US Dollar?

EDITOR'S NOTE: Russia was able to circumvent Western sanctions partly by boosting its gold reserves and backing the ruble with gold. In partnership with China and the BRICS countries, announcing the development of a new BRICS reserve currency advanced the Eurasian alliance’s plans to bifurcate the global economy. Now, Sberbank, Russia’s largest bank, plans to launch gold-backed digital financial assets (aka gold DFA) further weakening the US dollar’s dominance in cross-currency foreign exchange payments and, by extension, international trade. What’s the likelihood that Sberbank’s latest de-dollarization move ends up being the death blow that finally topples the dollar?

Russian Bank Sber aimed to degrade the dominance of the US dollar with its new digital currency, which is backed by real gold value.

Sberbank is one of the largest Russian banks, which is known for its multiple development works related to cryptocurrencies & blockchain technology use cases. The services of this Bank are available in multiple countries but in the last 5-6 months it faced significant restrictions as a part of the Russian vs Ukraine conflict, which initially started late February of this year. 

Recently Sberbank announced the launch of its first issue of gold-backed DFAs. Solver, a seller & manufacturer of diversified metals, became the first to get the issues of Gold backed digital assets. 

The value of Gold-backed DFAs will depend upon the actual price of Gold. 

Under the secured regulatory approval, the bank will provide up to 150,000 DFAs for potential investors to buy. Shared juridical documents noted that the Bank mentioned that issued Gold backed digital assets are risky for the holders/investors and their price will fluctuate.

Alexander Vedyakhin, first deputy chairman of the Executive Board at Sberbank, noted that such issued assets will help the country amid the de-dollarization, which occurred because of the Russia vs Ukraine conflict. 

The Deputy chairman said:

“We expect the number of corporate clients on our platform to grow rapidly and plan to expand the product line of digital financial assets.”

The current regulatory approval on DFA is based on 2020′ laws, while in July 2022 Russian president Vladimir Putin signed a bill to prohibit the use of digital assets in the payment system. 

It is worth noting that, the majority of the western countries supported Ukraine in the Russia vs Ukraine conflict, and to stop the war efforts, from the Russian military, Western powers like US, UK, EU imposed financial & trade restrictions on Russia. Under the restricted situation, Russian government agencies showed a significant Inclination toward the Crypto sector to bypass the international sanctions easily. 

Originally published by Jitender at Bitcoinik