Iran prepares to announce state-backed cryptocurrency

Getting your Trinity Audio player ready...

A trend is developing with countries suffering from U.S. sanctions. Iran appears to be pushing ahead with its plans to develop a state-backed cryptocurrency, and Al Jazeera reports they plan to unveil the digital currency at the two-day Electronic Banking and Payment Systems conference in Tehran on January 29.

Reportedly, the cryptocurrency will roll out in two phases. At first, it will be a rial-backed stablecoin of sorts, and will help Iranian banks and institutions active in the crypto space facilitate payments. If that works out, the plan is to eventually roll it out to the public for use as a digital currency for goods and services.

Iran was excluded from the dominant SWIFT payment system in November 2018, which global banks use to conduct cross-border money transfers. As a result, the country is unable to conduct transactions for imports or exports, and the economy has suffered. This cryptocurrency play comes with the long term goal of joining an alternative to the SWIFT system based on blockchain technology.

Iran has already signed a cooperation agreement with Russia and Armenia to work on such a system.

For countries suffering under international sanctions, cryptocurrencies are increasingly looking lie a solution. Russia has stepped up its plans to introduce cryptocurrency legislation, and is reportedly looking at cryptocurrencies as a replacement for the U.S. dollars as their reserve assets.

Venezuela, another country racked by sanctions, has famously declared the Petro token as their national currency. Countries looking for a model of success may want to look elsewhere, as the value of that cryptocurrency has been unclear, and has not helped the economy of the South American country at all.

Al Jazeera reports that Iran will get assistance on their crypto-rial from China, Turkey, Venezuela and Russia.

Expectations are that the current sanctions will still shut out Iran’s crypto effort from global markets, but the hope is that local applications will help improve the economy. It could happen too, so long as they don’t listen too much to the Venezuelans.