Iran recently announced plans to develop its own national cryptocurrency in order to circumvent U.S. sanctions. This intention to create blockchain-based infrastructure for the country’s banking sector comes as the Trump administration has reimposed sanctions that the U.S. suspended as part of the Iran nuclear deal. Like with the regime in Venezuela, which tried to launch its own cryptocurrency earlier this year, this appears to be a desperate attempt by Tehran to defy Washington while trying to usurp the burgeoning growth of Bitcoin in Iran. Tehran’s cryptocurrency pivot likely is aided by Russia as part of a collaborative attempt to build a new system for global financial transactions to help their respective banks become “sanctions resistant.” Ironically, this authoritarian embrace of blockchain technology conflicts with the ideals of libertarianism and censorship-resistance supported by many cryptocurrency enthusiasts.
When President Trump announced that he would withdraw from the Iranian nuclear deal, Tehran had to reckon with the danger of being shut out of the global financial system. Crippling sanctions that removed Iranian banks from the global SWIFT banking system and impeded their ability to transfer funds internationally are what drove Iran to the negotiating table back in 2013. But even with sanctions lifted two years ago, Iran’s economy has faltered, sparking widespread protests by low-income Iranians as the rial has dropped precipitously since the beginning of 2018. Looking for ways to preserve wealth, many Iranians have begun purchasing cryptocurrencies like Bitcoin to store value.
Iranian senior officials have been working to prevent capital flight by discouraging citizens from using Bitcoin and, according to some reports, restricting access to foreign crypto exchange websites. Now, the Iranian government wants to introduce a cryptocurrency it can control, unlike the decentralized Bitcoin protocol. Iran’s central bank, like many countries, has been doing academic research on blockchain technology at least since 2017, but only in recent months have officials publicly touted the idea of a state-based crypto. Various Iranian agencies are coalescing around blockchain innovation. In early July, Iran’s official department for science and technology signed an agreement to work closely with the central bank on cryptocurrency technology. Weeks later, Iran’s Information and Communications Technology ministry signed an MOU with Iran’s national library to use blockchain technology to digitize the country’s archives. Iran clearly is bullish on crypto/blockchain tech.
Russia probably is influencing Iran’s push toward crypto. In May, both Iranian and Russian press reported that a senior Iranian economic official met with his Russian counterpart in Moscow. The Iranian official then announced that Iran’s central bank would develop proposals for a state-backed cryptocurrency and opined that cryptocurrencies could help both countries steer clear of the SWIFT banking system and dollar transactions. Russian media also reported that the two countries planned to reconvene to discuss interbank cooperation in July, although there has not been press coverage of that meeting. Interestingly, Russian entrepreneurs helped Venezuela’s Maduro regime to launch a state cryptocurrency (though it appears that effort has floundered); some media sources report that the Kremlin has overseen the Venezuelan crypto project.
Re-dessiminated by The Asian Banker from Forbes