As U.S-imposed sanctions continue to cripple Iran economically, the Islamic state is reportedly on the verge of announcing its state-backed cryptocurrency. The ability of Iranian financial ...
As U.S-imposed sanctions continue to cripple Iran economically, the Islamic state is reportedly on the verge of announcing its state-backed cryptocurrency.
The ability of Iranian financial institutions to conduct transactions and relate with the rest of the world has been shackled since the sanctions were enforced and many believe the Iranian cryptocurrency will help abate some of the effects of the sanctions. To further stoke the rumor fires, it has been reported that the Iranian government expects to make an announcement concerning the digital asset at the annual Electronic Banking and Payment Systems Conference, which kicks off in Tehran on January 29, 2019, according to Al Jazeera.
The Donald Trump administration imposed stern sanctions on Iran back in the middle of 2018 over “malign activities” being carried out by the state. By November, Belgian-based financial messaging system SWIFT was banned from providing its financial services to the country as well.
Citizens of countries such as Iran, which have been banned from the SWIFT network, find themselves unable to make and receive payments for foreign trade activities and a wide array of other international transactions. This drove the country into the research and development of its own digital currency, as many saw this as the only way to ensure that Iranian banks and citizens could continue to conduct the cross-border transactions that were no longer accessible due to the SWIFT ban.
News outlet Al Jazeera reports that the state-backed digital currency is to be rolled out in two phases. The first will be a crypto Rial, which will be used for making payments between Iranian-based commercial banks and other internal organizations in the domestic crypto space. Public access to the currency is expected to come at a later phase, as this will help members of the general public to make payments for local goods and services.
For now, all indicators point to the fact that this cryptocurrency will be for internal use only. By making use of blockchain technology and cryptocurrencies to facilitate transactions, Iran would be joining other blockchain-based payment networks, which many believe might end up making the traditional SWIFT network obsolete.