Iran and Digital Assets
According to a statement released by the Central Bank of Iran, cryptocurrencies and blockchain technology will be considered with “more freedom to finance and set up the development of the technology.”
Since the reinstatement of sanctions in 2018, the Iranian government’s stance on cryptocurrencies has changed from outright banning them to potentially creating its own digital currency via blockchain technology!
Reports claim that the Islamic Republic released a draft regarding a state-backed cryptocurrency. It’s also thought this alleged government-backed cryptocurrency could act as a vital tool to escape the dollar’s economic influence and create an effective alternative to SWIFT, which recently suspended services to most Iranian banks in November 2018.
The new digital currency is expected to be rolled out in two phases with it being a virtual version of the national currency, the Iranian rial.
“According to our information, an active development of an Iranian version of SWIFT is currently under way.” – Aljazeera.com
SWIFT’s recent suspension and U.S. economic sanctions have financially starved Iran, preventing it from paying for imports and receiving payments for exports. Reinstating sanctions has also resulted in a currency crisis, pushing Iran to the brink of economic ruin.
Russia, a close ally of Iran, also had sanctions imposed during the Ukrainian crisis. Russia responded with its own sanctions, banning food imports from the E.U., U.S.A., and several other nations.
Many nations in the East now seek to de-dollarize their economies and create competing financial systems independent of the dollar and Western institutions, such as SWIFT.
Will Iran’s Plan Work Against the “Trump Economy?”
Developing an independent financial system using blockchain and distributed ledger technology (DLT) could give Iran’s economy some needed independence and loosen the sanction’s stranglehold. However, this depends on how effective the new system is on a global level, and not just a national level.
Venezuela also attempted to create its own digital currency to avoid sanctions, but it raised many red flags around its legitimacy and purpose.
Iran’s regional neighbors Saudi Arabia and the U.A.E. are also developing a payment system that connects financial institutions together using DLT and cryptographic currencies. This could create a technological “standard” in the region for payment settling…
BRICS nations and its allies, such as Iran, could use new technological solutions provided by blockchain/DLT to create a financial, tokenized market of their own outside the dominance of the West’s dollar/euro-powered system and provide fresh competition to companies such as SWIFT.
This is not investment advice; please always do thorough research and only invest what you are willing to lose, especially in times of uncertainty.