Iran, the world’s third largest oil producer, has reportedly completed the development of its state-sanctioned cryptocurrency. The yet-to-be-named digital currency will be backed by the national fiat currency— Rial. Currently, in its pilot stage, the state cryptocurrency will strive to identify the effectiveness and feasibility of digital currency and the associated blockchain technology. And also evaluate how blockchain technology can be useful in financial payments, bank-to-bank settlements, and retail banking.
The Central Bank of Iran (CBI) had earlier signed a contract with Informatics Services Corporation (ISC) to design and develop a national digital currency with the aim to further expand the country’s banking services and, simultaneously resist the severe US economic sanctions against the oil-rich nation.
Speaking to Ibena news agency, Seyyed Abotaleb Najafi, CEO of Informatics Services Corporation (ISC) said that once approved the state-backed cryptocurrency “can be used in a distributed and one-to-one framework for transferring without any institute’s interference.” He further explained,
“After getting Central Bank of Iran’s approval [it] will be used in the country’s banking system … in the first phase the blockchain banking infrastructure will be granted to Iranian commercial banks to use it as a token and payment instrument in transactions and banking settlement.”
On November 5, US imposed the toughest-ever sanctions against Iran which cut off the rest of the world from the country’s oil, shipping and gas sectors as well as from its financial system. A total of eight countries which include China, Japan, India, and South Korea, will, however, receive waivers allowing them to continue importing Iranian oil. Back in May, another round of sanctions by the US had targeted Iran’s currency, aviation, and other sectors.
On November 9, the Society for Worldwide Interbank Financial Telecommunication, popularly known as Swift, succumbed to the US pressure to sever ties with the Central Bank of Iran. This stringent move has left Iran financially excluded amidst crucial economic effects.
On the development, Steven Mnuchin, US Treasury Secretary stated, “In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, Swift is suspending certain Iranian banks’ access to the messaging system. This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system. Our mission remains to be a global neutral messaging provider.”
In the cryptocurrency sphere, leading global exchanges Binance and Bittrex have reportedly excluded Iran from the list of supported countries to receive services.