In an effort to improve its economy and promote international trade free from the constraints imposed by the unilateral sanctions of the Trump administration, the Islamic Republic of Iran has stepped up its efforts to bring to reality the adoption of a Central Bank Digital Currency that would allow it to tokenize part of its monetary reserves and strengthen its internal and external trade.
According to information published by the Iranian news portal Ibena, Seyyed Aboutaleb Najafi, Chief Executive Officer of Informatics Services Corporation (ISC) commented that the cryptocurrency project is at ” a pilot stage ” awaiting the approval of the country’s Central Bank to move to a stage of implementation throughout the whole national banking system.
Najafi was quite enthusiastic about the idea of a national cryptocurrency, referring to its adoption as an evolution of the current banking infrastructure:
“In order to realize renovation and create new infrastructure in our banking system, banks’ back-end processes which is still in paper and traditional way should be changed and evolved”, Najafi said.
Also in a subsequent press release, ISC revealed more details of the new Iranian cryptocurrency:
- It is rial-backed and has been designed and developed by Informatics Services Corporations based on Hyper-ledger Fabric Platform technology.
- The issuer is Central bank of Iran and the volume of issuance depends on the bank’s decision.
- Iranian cryptocurrency has been developed under private blockchain infrastructure and cannot be mined.
- The infrastructure is supposed to be as an ecosystem available for Iranian banks and active companies in cryptocurrencies area after being tested and reviewed.
Are Cryptocurrencies Real Means to Gain Economic Freedom?
The use of cryptocurrencies can be a solution to a geopolitical problem. According to Iran, the United States uses its advantageous position as issuers of a global reserve currency used for international exchange to intervene in the policies of other countries. By not relying on banks to transmit value, an official cryptocurrency can be a powerful tool for leveling the balance of power. This is what Gholamreza Jalali, the head of Iran’s Passive Defense Organization, said to Mehr News:
“Cryptocurrencies can help bypass certain sanctions through untraceable banking operations … our major problem here is the US dollar, because the United States uses its national currency to control any country’s SWIFT operations, so we should reduce dependence on the dollar and replace it with another currency.”
Iran Is Not Alone
The United States government has actively participated in a campaign to prevent the implementation of official cryptocurrencies, and thus continue to maintain its dominant position in the economic sphere.
Since Venezuela announced the decision to work to launch its own Petro cryptocurrency, the U.S. government publicly expressed its annoyance and initiated a strong discrediting campaign to prevent its acceptance. Similarly, the pressure exerted by the US Treasury Department made it difficult to adopt an official cryptocurrency in the Marshall Islands.
Update: On Monday, November 12th, 2018, SWIFT confirmed it was disconnecting Iranian banks from its platform due to threats from the US Treasury Department. According to RT Mr. Steve Mnuchin, U.S Treasury Secretary was very pleased with SWIFT’s announcement:
“US Treasury Secretary Steve Mnuchin said SWIFT was making “the right decision.” He has earlier warned the organization it could be penalized if it doesn’t cut off financial services to entities and individuals doing business with Iran.”
Earlier this month, Mr. Mnuchin warned SWIFT to comply with the will of the United States to avoid unilateral sanctions:
“We have advised SWIFT that it must disconnect any Iranian financial institutions that we designate as soon as technologically feasible to avoid sanctions exposure.”