Iran is all set to take a leaf out of Venezuela’s book, preparing to launch its own “indigenous” state cryptocurrency that will help the nation to circumvent the latest economic sanctions enforced by U.S. President Donald Trump.
The announcement was made by Alireza Daliri, the Directorate’s deputy for management and investment affairs. This project was revealed by Daliri to be developed in cooperation with Central Bank of Iran (CBI). The cryptocurrency will be fundamentally backed by Iran’s national currency, the Iranian rial.
“We are trying to prepare the grounds to use a domestic digital currency in the country. This currency would facilitate the transfer of money [to and from] anywhere in the world. Besides, it can help us at the time of sanctions.”, stated the official.
Earlier this week, Iran’s state-sponsored Press TV reported that the “plan to create an indigenous cryptocurrency” was moving forward, and the central bank was working with “domestic knowledge-based companies” to develop the digital currency.
Iran vibed an anti-crypto stance earlier this Feburary when the the central bank rejected as baseless the reports on its role in the sales of and transactions in cryptocurrencies. “The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme have made the market of these currencies highly unreliable and risky,” the central bank was quoted by the Iran Front Page’s website.
But days after this warning, Information and Communications Technology Minister, Mohammad Javad Azari-Jahromi said that Iran has developed an experimental local cryptocurrency.
Answering to the recently instated ban by Central Bank, Jahromi said that “The central bank’s (ban) does not mean the prohibition or restriction of the use of the digital currency in domestic development,” as quoted by state news agency IRNA.
“Last week, at a joint meeting to review the progress of the (local cryptocurrency) project, it was announced that the experimental model was ready,” Azari-Jahromi added.
Iran has already been introduced to U.S. sanctions, being blocked by SWIFT. On March 15, 2012, SWIFT agreed with the European Union not to forward messages to any Iranian bank or individual that is blacklisted by the bloc. That banned some 30 Iranian banks from the global financial network, banks which Tehran depended upon to import and export goods and, most importantly, sell its oil internationally.
SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is also a physical institution based in Belgium which forwards the electronic transfer order from a bank to the recipient. If it refuses to forward the money transfer message, the transfer request cannot be completed.
But Tehran proved to be both imaginative and resilient in bypassing sanctions, largely because its key economic partners including China, India, and Turkey were ready to work with it.
In the past, Venezuela also launched its own state backed cryptocurrency in a desperate attempt to battle deepening economic and political crises. Although later, Petro, the first cryptocurrency to be state-backed, was denounced by the lawmakers as a fraud and a threat to those who invest in it with a particularly fiery stance from legislator, Jorge Milan stating:
This is not a cryptocurrency, this is a forward sale of Venezuelan oil. It is tailor made for corruption.
He also added “This is a new fraud disguised as solutions to the crisis. Here the only novelty is that this inefficient Government wants to compensate the lack of production with these virtual barrels, generating new and illegal debt.”
On August 6th, the first batch of sanctions against the Islamic Republic will go into effect. This includes sanctions on the acquisition of U.S. dollar banknotes by Iran’s government, sanctions on its trade in gold and other precious metals, sanctions on sales and transfer of aluminum, steel, coal, and graphite, and sanctions on Iran’s automotive sector. However, the second set of sanctions of November 4th will hit the crucial energy and banking sector.