Iran was in the news earlier this week as plans for a Crypto Rial seem to have appeared in the media. While the announcement is yet to be made, it has now come to light that Tehran is already in talks with at least eight nations for trade deals via cryptocurrencies. Let us take a closer look:
With their economy being severely affected by US-imposed trade sanctions, followed by a number of Iranian banks being banned by SWIFT, the global banking payments system, it appears that Iran is now looking forward towards cryptocurrencies as their last resort. Mohammad-Reza Modoudi, the acting head of Iran’s Trade Promotion Organization (TPO), commented that Iran is in talks with eight countries about trade over cryptocurrencies.
Interestingly, when one hears that Iran is talking to eight nations about trading using cryptocurrencies, one is bound to think that they might be other nations which face similar US-issued sanctions, such as Russia, Venezuela and North Korea. However, the nations that Iran is holding these talks with are actually Switzerland, South Africa, France, England, Russia, Austria, Germany and Bosnia. Modoudi, hopeful that more foreign investors would come soon, commented:
“Representatives from Switzerland, South Africa, France, England, Russia, Austria, Germany and Bosnia have visited Iran to hold related talks about the issue.”
Iran has been working towards developing its own cryptocurrency since as mid-2018. This upcoming state-backed cryptocurrency is likely to be pegged to the national currency, the Iranian Rial. While no clear details have been made public, it is expected that this would work similar to how Venezuela’s Petro works. However, unlike Venezuela, Iran does not plan to immediately bring it into use for the public. In the initial stages, the crypto-rial would be used for international trade.
Iran to Ban Bitcoins Payments?
A draft report from the Central Bank of Iran reads that ‘unapproved’ cryptocurrencies must be prohibited as a form of payment in the country. The report, which is titled Obligations and Rules Regarding Cryptocurrencies, states that all unapproved cryptocurrencies can be blocked in the country. It is worth noting that Iran wants to block the use of cryptocurrencies for payments purposes only. The report adds that holding or transferring small amounts of approved cryptocurrencies will be acceptable.
As of now there is no clarity about the ‘approval’ of cryptocurrencies and what parameters Iran proposes to use. However, when looked at with the context of the Crypto-Rial, one can assume that Iran wants its citizens to make use of the Crypto-Rial and is thereby dissuading users from using other cryptocurrencies.
This report will be discussed in detail during the Electronic Banking and Payment Systems Conference, which is being held in Iran’s capital city of Tehran this week. It will be interesting to see if Iran chooses this as the opportunity to announce the Crypto-Rial, specially considering that blockchain is one of the key themes of the event.
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