Global financial messaging platform SWIFT has officially removed the Central Bank of Iran from its system due to sanctions placed by the United States. The ban will make it much more difficult for Iran to complete international trade deals. As a solution, Iranian officials have decided to expedite the creation of the Crypto-Rial, Iran’s state-backed national cryptocurrency.
Local news sources reported that Informatics Services Corporation (ISC), a private company that has joined forces with the Central Bank of Iran, has already developed the Crypto-Rial. CEO Seyyed Abotaled Najafi explained that the new currency eliminates the need for SWIFT and similar messaging and settlement services.
Najafi Claims Coin was Created to Explore Blockchain’s Potential
However, Najafi clarified that the Crypto-Rial was initially conceptualized and created before the need to circumvent sanctions arose, although some analysts say otherwise.
Najafi claims that the purpose of creating the Crypto-Rial originally had much more to do with exploring the potential of blockchain technology and cryptocurrency-based financial systems on institutional and retail levels. The currency is collateralized 1:1 with the country’s national fiat currency.
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According to a report from NewsBTC, Iran will begin issuing the Crypto-Rial for use within commercial banks within the “coming days.” This will enable them to use tokens as a transactional instrument in banking settlement.
The Crypto-Rial will not affect the international forex value of fiat Rial. The country’s national currency will continue to be counted in terms of its physical dollar reserves; this would only change if the Crypto-Rial was recognized as a legitimate currency internationally.
State-Backed Currencies Are Slow on the Uptake, But Popular in the Developing World
While state-backed cryptocurrencies have been a part of the international conversation around blockchain technology and the economy, not much action has been taken to create them or create regulatory structures that would support them by most of the developed world.
However, Iran isn’t the only country that seems to view the creation of a state-backed cryptocurrency with opportunistic eyes. The Venezuelan Petro has caught international attention since its creation earlier this year, with many analysts also claiming that it is nothing more than an attempt to circumvent international statement.
At the beginning of this year, an adviser to Vladimir Putin publicly stated that a Crypto-Ruble could be created and used to evade sanctions as well.