The major benefit of digital currency is that it can be transferred easily from one place to another without any need of using the conventional methods. Digital currency is designed in a way that it allows the investors to bypass the traditional form of foreign exchanges or bank transfers that can take a lot of time to process. The bigger the amount transferred through traditional banks, the more time it will take. Moreover, digital currencies can be useful for countries that are under the sanctions imposed by the international market. They can overcome economic isolation with the help of such form of currency.
One example of a country that was under economic sanctions at international level is Iran. The economic sanctions imposed on Iran were lifted way back in 2015 after Iran promised to design its nuclear program in order to meet the standards that were laid down by the IAEA i.e. International Atomic Energy Agency.
During Iranian sanctions, citizens of Iran moved a total of $2.5 billion crypto out of the country. A report was published in Forbes in which the reason behind people moving their crypto out of the country was identified. One citizen in an interview with Forbes pointed out:
With exchange offices closed, sanctions and the rial dropping like crazy it seems like a good idea to use Bitcoin. I know that there are a few people selling and buying Bitcoin in Iran with LocalBitcoins. For now it seems like Bitcoin is literally the only way to get money out of the country… but with the rampant inflation of the rial a lot of people won’t be able to afford it.
The above-mentioned reason is one of the factors that forced the Iranian government to prohibit both domestic banks and other financial institutions from dealing in different types of digital currencies.
Bloomberg pointed out the stance taken by domestic banks and other financial institutions. It states:
All branches of banks, credit institutions and currency exchanges should stay clear of any sale or purchase of these currencies and avoid undertakings that facilitate or promote such currencies. Action will be taken against those who contravene the regulations.
However, there are a lot of speculations in the air regarding Iran planning to launch its own experimental cryptocurrency. The design model has been developed. The launch of its own cryptocurrency means that the essence of decentralized cryptocurrency will no longer exist, as the Iranian form of cryptocurrency would be centralized. The Iranian cryptocurreny will be controlled and monitored by the authorities within Iran.
The initiative is being taken to restore the faith of Iranian systems in its own economy and country. If Iran would have its own cryptocurrency then people would be investing in it more as compared to other currencies.
It came as a surprise when Trump administration pulled out of the Iran nuclear deal and imposed more sanctions on the country. Iran is back in that unstable position therefore; the need of having their own cryptocurrency has increased as people might start moving their crypto out of the country again.
Secretary of Iran’s Supreme Council of Cyberspace, Abolhassan Firouzabadi, in an interview pointed out that digital currency would be made official in the country through proper regulations. He states:
Decisions are pointing toward the launch of an official digital currency in Iran. “No decision has yet been made about which digital currency should be made official in Iran, but it was decided that the Social Commission form a working group to discuss the launch of virtual currency exchanges, data analysis of digital currencies, and which currencies should be made legal in the country. We are also planning to come up with a national and joint cryptocurrency for economic transactions with friendly countries.
He further added:
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.
The decision of introducing Iranian cryptocurrency would be a very important factor in terms of deciding the direction that Iranian economy will take. People of Iran are again witnessing the economic isolation. There are equal chances of adopting or rejecting their own cryptocurrency. Citizens of Iran might continue to move the digital currency out of Iran regardless of the initiative that is being taken by the Iranian government. Only time can tell whether the policy would be beneficial or not for Iran as a whole.