Iran could be announcing its first state-backed cryptocurrency soon. The virtual currency is expected to be made public at the annual Electronic Banking and Payment Systems conference which will begin in Tehran on January 29. The theme of 2019’s gathering is “blockchain revolution”.
“Investigations are underway regarding the decision of the Central Bank of Iran on the blockchain-based national currency,” said the Secretary General of the Central Bank of Iran Mohammad Talebi. He also commented that the cryptocurrency requires special conditions and it “isn’t necessary” to make quick decisions.
Details of the Islamic Republic of Iran’s rial-backed cryptocurrency were released last year. According to IBENA, Informatics Services Corporation (ISC) – affiliated with Iran’s Central Bank – the issuer is the Central Bank of Iran and the volume of issuance depends on the bank’s decision. It has been developed under a private blockchain infrastructure and cannot be mined.
It is likely to be rolled out in phases, initially to allow payments between banks and other businesses in the crypto space, then perhaps as a medium for the Iranian public to pay for goods and services.
Iran Now Barred From Swift – Could Cryptocurrency Be The Way Forwards?
Iran’s economy suffered a blow in November when some of its banks were barred from SWIFT, the Belgian based global messaging system that facilitates cross-border payments. This means imports and exports are much more difficult to manage, and leaves them having to rely on alternative methods of moving money.
Although there is no official confirmation that Iran is working with other countries, recent developments provide hints that they are working in tandem with others to form a blockchain-based international payment system that could emerge as an alternative to SWIFT.
In 2018, Iran signed a trilateral blockchain cooperation agreement with Russia and Armenia. Both Russia and Iran have been sanctioned by the US and it makes sense for them to look towards this new technology to overcome financial restrictions.
Russian President, Vladimir Putin said that Russia is “actively working” with partners to establish financial systems that are fully independent of SWIFT, but he did not name any of those countries.
Imitating their regional rivals, Saudi Arabia and the United Arab Emirates, who recently launched a joint cryptocurrency, Iran could possibly use the crypto-rial to bypass sanctions and trade with other partners.
A digital currency for Iran faces many difficulties, but some of the country’s crypto supporters think that the acceptance of blockchain by the government could create a positive environment for the sector. They are hoping that the country’s regulators do not strangle innovation.
“I’m very hopeful about the future,” said Soroush Hakimi, a young Iranian neuropsychologist who is working to develop a blockchain-based crowdfunding platform. “Startups working in this field have established a good benchmark while research groups and blockchain labs at universities have significantly grown, so I see both the government and academia honing in on blockchain technologies”.