Iran’s answer to SWIFT removal? A state-issued cryptocurrency

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Iran is accelerating the plans for a national cryptocurrency in response to U.S. sanctions which could otherwise threaten international settlements, according to reports emerging this week.

After the Central Bank of Iran was ejected from the global SWIFT network following the reintroduction of U.S.-led sanctions, sources close to the CBI have confirmed it is stepping up efforts to introduce state-backed digital currency, local media outlets reported.

Dubbed the ‘Crypto-Rial’, the cryptocurrency would replace the need for remitting payments over the SWIFT network, effectively providing the Iranian state with a work-around to their exclusion from the global financial mainstream.

But beyond the benefits in circumventing sanctions, the government is now reported to be introducing a pilot programme involving major Iranian commercial banks, as a way of moving domestic financial systems over to blockchain, too.

The currency would be pegged at 1:1, and backed by physical reserves of fiat currency—a model for national cryptocurrencies some analysts predict could eventually pose a threat to the U.S. dollar.

If the pilot proves successful, this could speed up the rate of adoption of the technology in Iran, in tandem with similar efforts in other countries affected by U.S. sanctions.

In conversation with RT, stockbroker Max Keiser said the U.S. decision to eject Iran from the SWIFT network would hasten the demise of the dollar as the world’s dominant currency, as excluded states lead the way with blockchain-based state-backed fiat currencies.

Keiser noted, “The U.S. puzzlingly seems to want to expedite global de-dollarization with its ill-advised weaponization of SWIFT.”

Russia and China are already reported to be working on alternatives to SWIFT, which analysts expect could spark a trend for “blockchainization” of state-backed fiat currencies. Both Russia and China are already increasing their gold reserves, which would shore up the value of their domestic currencies ahead of any significant change of direction.

Trading in cryptocurrencies is presently illegal in Iran, with the authorities previously taking a hardline view against cryptocurrencies. However, faced with potentially devastating financial sanctions, a state-backed crypto could well provide the facility Iran needs to avoid current financial networks like SWIFT.