As more and more financial sanctions begin to engulf Iran, Iran’s government has decided to launch its own cryptocurrency network to improve its financial stability bypassing all financial sanctions.
Report regarding the development of its indigenous cryptocurrency was posted on Iran’s official news source PressTV. Ali reza Daliri, deputy for management and resource development, stated that full support is provided by the government to launch this program of developing its very own cryptocurrency platform. Iran plans to enter the market of blockchain in order to utilize the decentralized framework provided by it.
Alireza Daliri stated in the official report made by the government of Iran that:
We are trying to prepare the grounds to use a domestic digital currency in the country.
All of these steps are taken in account of all the financial sanctions that have been imposed upon Iran by the United States in the past. In order to dodge these restrictions and in order to ensure a smooth flow of currency within and across the border, Iran’s government has started working in the development of its own cryptocurrency platform on a national scale in collaboration with the central bank.
Daliri has clearly suggested the government’s aim of integrating cryptocurrency module in its financial framework, enabling all the domestic commercial banks to implement cryptocurrency framework to deal on a global scale is to deal with the repercussions of all the financial restrictions that have been previously imposed on Iran.
Due to all the sanctions of the past, Iran is unable to perform its banking transactions with the global banks and financial institutions. Having a stable cryptocurrency platform will enable Iran to perform banking transactions on a global scale, inculcating stability in Iran’s financial framework.
In the past we have seen many disputes between Iran and U.S. regarding security issues. And in the recent times, Iran’s alleged nuclear program has been a major cause of this disrupt between both the countries. In 2015, the U.S. withdrew from Iran’s nuclear agreement and along with its withdrawal from the agreement, placed sanctions on Iran that limited Iran’s ability to buy or acquire U.S. dollar.
This proved to be a major bottleneck in the growth of Iran’s finance sector and the need of the ever expanding crypto network became inevitable.
It was also suggested by Daliri that since this field is relatively new in the region and there is no proper framework to regulate such activities, it is a very good opportunity for the private sector to enter the field and gain as much benefit as they can. Daliri also informed that the initial step for the implementation of such a cryptocurrency network in the country must be based upon local currency of the country.
With regards to the implementation of this framework, Daliri also boasted the view that many private companies based in Iran are more than capable of developing such a framework for the digital currency. The companies working on the project of developing cryptocurrency framework of Iran have also been linked to the Central Bank of Iran, CBI.
This move taken by the government of Iran seems heavily influenced by a similar tactic played by the government of Venezuela in order to avoid sanctions imposed on it by the U.S. The President of the Republic, Nicolás Maduro, announced that:
Venezuela will create a petromoneda cryptocurrency to advance monetary sovereignty, as it will help to overcome the financial blockade and thus move towards new forms of international financing for the economic and social development of the country.
This project of developing its own cryptocurrency framework can be seen as a great improvisational move made by the government of Iran as it can then enter the market of cryptocurrency without having to go through traditional financial sanctions imposed upon it. But, since this move is heavily affected by similar steps taken by the government of Venezuela same repercussions as Venezuela might follow for Iran.
Donald Trump issued strict orders against the government of Venezuela after it launched its own cryptocurrency network. Trump stated that:
All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.
The usage of cryptocurrency network to circumvent sanctions posed by the U.S. seems a very viable option but it might not be the best when it comes to the future relations.
All in all, the development of a crytocurrency network might provide Iran with a viable option of bypassing restrictions but the sanctions imposed by the U.S. on Iran are not going to mitigate anytime soon. In fact, the development of its own cryptocurrency network might even worsen the situation up for Iran. But since Iran has already dealt with so many restrictions from U.S. in the past, trying out a way to tackle the situation with a bit of novelty might not be a bad choice at this point.