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Iran Backpedals on Bitcoin, Plans its Own State Cryptocurrency

Last Updated March 4, 2021 5:05 PM
Samburaj Das
Last Updated March 4, 2021 5:05 PM

Contrary to reports of the Iranian government preparing the ‘infrastructure’ for bitcoin usage in the country, Iran’s central bank has refuted claims of recognizing bitcoin as a legal currency.

In November, Iran’s minister of Information and Communications Technology (ICT) revealed the ministry was preparing to embrace bitcoin as a solution to bypass economic sanctions that has previously disconnected Iran’s banking system from global commerce and finance. “The ministry of communications and information technology has already conducted a number of research studies as part of efforts to prepare the infrastructure to use Bitcoin inside the country,” ICT minister Amir Hossein Davaee reportedly said at the time.

Iran underwent a banking blackout after global payments rail SWIFT banned the country from its network in 2012, a blockade that lasted four years until sanctions on Tehran were lifted by former US President Obama’s nuclear deal in 2016.

Within weeks, Iran’s High Council of Cyberspace (HCC) stated its ‘positive’ view on cryptocurrencies, specifically bitcoin, with regulations. “We welcome Bitcoin, but we must have regulations for Bitcoin and any other digital currency,” stated HCC secretary Abolhassan Firouzabadi.

However, the country’s central bank has now reportedly poured cold water on any embracive notion toward cryptocurrencies, rejecting previous reports of authorities keen on Bitcoin.

According to local news resource Iran Front Page , the Central Bank of Iran says it has never recognized bitcoin or any other cryptocurrency as an official currency in the country. The central bank warned investors that they “may lose their financial assets” in crypto-related investments due to market volatility.

The central bank was quoted as stating:

“The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme have made the market of these currencies highly unreliable and risky.”

Further, the central bank is reportedly collaborating with other financial institutions to reportedly develop a mechanism to ‘control and prevent’ cryptocurrencies in Iran. Such a move, if true, is yet to be verified and the central bank has not issued any official statement in this regard.

What is known, however, is Iran’s endeavor to develop a local state cryptocurrency. Yesterday, Iran’s current ICT minister Mohammad-Javad Azari Jahromi publicly revealed efforts toward exploring a state cryptocurrency using blockchain technology. The initiative is in collaboration with the Post Bank of Iran, a state-owned bank based in Tehran.

Roughly translated, the message reads:

“In a meeting with the board of directors of the Post Bank of Iran on digital currency based on blockchain, the necessary measures for the pilot implementation of the country’s first digital currency were set out by using the country’s elite capacity. A pilot model for review and approval will be presented to the banking system of the country.”

Iran’s foray into exploring a state cryptocurrency follows Venezuela’s own pre-sale launch of the Petro, described as an oil-backed cryptocurrency.

Featured image of Tehran skyline from Shutterstock.