Iran has prepared a draft of its new national cryptocurrency, according to local news source Financial Tribune.
Supreme Cyberspace Council
It was developed by the country’s National Cyberspace Center on instructions from President Hassan Rouhani.
According to Saeed Mahdiyoun, an official at the Supreme Cyberspace Council, the Central Bank of Iran will publish its stance on the matter at the end of September. Meanwhile, the SCC is actively pursuing the development of the cryptocurrency.
According to local news source Ibena.ir, the coin is backed by the rial. It will be first be used for interbank payments, and then released for people to use in everyday retail transactions. It has been designed with the Hyperledger Fabric platform, and cannot be mined.
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Iranian banks were banned from dealing with cryptocurrency in April 2018, as the central bank was concerned about money laundering. The main purpose of the national cryptocurrency will be to circumvent international sanctions.
Money or bombs?
Between 2006 and 2015, and especially from 2012, sanctions were imposed on Iran by the UN because the Islamic republic kept trying to develop nuclear weapons. An agreement was signed in 2015 whereby some sanctions were lifted in return for Iran stopping with these ambitions. In May 2018, the US withdrew from this agreement, and some predict that the Iranian rial will lose 57 percent of its value by the end of 2018.
In response, Iranians have purchased approximately $2.5 billion worth of cryptocurrency, according to Mohammad Reza Pourebrahimi, Chairman of the Economic Commission of the Parliament of Iran. Part of the reason for this is because SWIFT, the international money transfer service, stopped servicing the country.
In July, sources reported that the government is censoring Bitcoin exchanges because Rouhani doesn’t want money leaving the country. However, people are turning to Bitcoin as they consider it a safer store of value than the fiat currency in such trying times. This is something that we have seen happen in other countries too, such as Venezuela and Zimbabwe.
Venezuela has already developed a national cryptocurrency, actually intending it to replace its now-worthless bolivar. The Petro is pegged to the value of oil, a commodity in which Venezuela is rich. The Banco Central de Venezuela has even released a mobile phone application that converts bolivars to ‘bolivar soberanos’, a new currency whose value is pegged to the Petro. According to CCN, the application has been downloaded more than 10,000 times to date.