Iran Banned From International Banking Network Sees Bitcoin Trading At $18,095 USD Locally
The U.S led sanctions on Iran have begun to bite, with the Islamic Republic’s Central Bank now officially disallowed from the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The move means that Iran’s top bank cannot work with the global network of financial institutions, practically excluding the bank from doing business with the world. As a result, Bitcoin (BTC) appears to be trading at a huge premium compared to local markets.
Bitcoin trading at the equivalent of $18,000 USD
Bitcoin in Iran is currently selling for 760,000,000 Iranian Reals or $18,050 USD. This represents a 230% premium over major crypto exchanges. What’s even more interesting is that volume in the region is on the rise despite these hefty premiums.
Though this is the first time SWIFT has cut links with the Iranian bank, it comes at a critical time for Iran. Most of the population has begun to feel the weight of the sanctions that took effect earlier this month, with protests launched in some cities.
However, Iran appears to have been prepared for this, with the country’s leadership hinting in April that it would consider switching to a nationally-issued cryptocurrency to mitigate any eventualities.
The U.S criticized, but will Iran adopt cryptocurrency?
There have been criticisms leveled at the U.S for the complete isolation of Iran’s central bank. But the U.S maintains that it won’t relent in its effort, with National Security Advisor John Bolton confident that Washington’s sanctions would “hurt” the Islamic Republic of Iran’s economy.
Speaking in Singapore on Tuesday, Bolton said:
“We think the government is under real pressure and it’s our intention to squeeze them very hard.”
One criticism has come from Professor Steve Keen of Kingston University. The economist told RT that it’s unfortunate one country possesses so much power over the use of an international financial institution.
Professor Keen said that no single country should compel the international community to use a given national currency to facilitate global payments. Even more importantly, he believes that no country should have the power to force another country from such a system.
In a scathing criticism, Professor Keen said that the US had “gone rogue,” and was now a “bully,” before adding that the international community should not allow it to “dictate” to everybody else.
He noted that:
“The sooner the rest of the world develops an alternative payments system – possibly working through SWIFT, but using a basket of currencies as the basis for a supra-national unit of exchange – the better.”
While Keen’s comments may be echoed elsewhere, its Iran’s plans to counter the effect of the ban that matter in the short term.
In April, Iran’s Parliamentary Commission of Economic Affairs (IPCEA) revealed that Iran was looking at possible cooperation with Russia over the use of crypto to bilateral trade and payments.
Iran has been working on the crypto idea for nearly two years after reports emerged of a fiat-backed central bank-issued coin.
At the time, authorities are said to have considered crypto as one measure that can see them “bypass the use of the dollar and in the process, allow it find an alternative to replace the use of SWIFT.
The head of the IPCEA Mohammad Reza Pourebrahimi said Russia shared in that vision, with the two countries becoming the “first countries that use cryptocurrency in the exchange of goods.”
In September, Iran’s Supreme Cyberspace Council announced that the cryptocurrency mining was an accepted industry, opening up the crypto space further in the country.
The move to use crypto is perhaps Iran’s other alternative should the proposed special payment vehicle (SPV) aimed at helping EU countries to continue trading with Iran fail to take effect.