Iran Cryptocurrency Will Be Backed By Rial
The Republic of Iran is facing an economic crisis due to United States-led sanctions, and its rial fiat currency value has dwindled to the lowest levels seen in decades. In response to impending economic collapse, the Iranian National Cyberspace Center (NCC), at the order of Iranian President Hassan Rouhani, has finalized a draft of the nation’s own cryptocurrency.
The Central Bank of Iran, according to local news outlet Ibena, has revealed details of the cryptocurrency developed by the NCC, and has confirmed that the national cryptocurrency will be backed by Iranian rials.
In addition to being backed by the country’s fiat currency, the national cryptocurrency cannot be mined, and transactions will be recorded on a private blockchain based on open-source Hyperledger Fabric technology. Unlike traditional cryptocurrencies that are mathematically designed to control supply, the Central Bank of Iran will control the issuance of new tokens at their discretion.
Alireza Daliri, deputy for management and investment at the Directorate for Scientific and Technological Affairs told state-sponsored media outlet Press TV last month that the “currency would facilitate the transfer of money (to and from) anywhere in the world,” and will help Iran “at the time of sanctions.”
It was first reported in February that Iran was considering a state-backed cryptocurrency. Then in May, rumors circulated that Iran and Russia were considering using cryptocurrency to circumvent sanctions ordered by United States President Donald Trump. Iran took the lead from Venezuela’s issuance of its own cryptocurrency token, the Petro, which was also created in an attempt to save the country’s suffering economy.
Changing Iran’s Stance on Cryptocurrency
In April of this year, the Central Bank of Iran officially banned the use of cryptocurrencies like Bitcoin and Ethereum in financial transactions in an attempt to “prevent crimes such as money laundering and terrorism.” The ban applies to all banks, financial institutions, and exchanges within the country’s borders.
Saeed Mahdiyoun, deputy director of Iran’s Supreme Cyberspace Council, told Iranian Daily that the Central Bank of Iran could update its stance on cryptocurrencies before the end of September 2018.
The blanket ban hasn’t deterred Iranian citizens from purchasing cryptocurrencies like Bitcoin. In response to the collapsing value of the rial, over $2.5 billion in capital has been sent outside of the country’s borders, in order to purchase cryptocurrencies, according to Ibena.
Mohammad Reza Pour-Ebrahimi, economic commission chief for the Iranian parliament, said that only a “minority of citizens” are buying cryptocurrencies, and are only investing in the emerging technology for “speculative activities and huge profits,” and not due to the failing rial.