Iran Considering Privacy-Focused Cryptos To Evade U.S. Sanctions
Iran is likely to turn to cryptocurrencies in an effort to bypass U.S sanctions, says one of the country's top generals.
Iran is likely to turn to cryptocurrencies in an effort to bypass U.S sanctions, says one of the country’s top generals.
Cryptocurrencies can offer “great opportunities”
Brigadier General Gholam Reza Jalali, head of Civil Defense Organization, said on Monday that cryptocurrencies presented a great opportunity for the Tehran government, a clear indication that Iran is serious about its push to develop a state cryptocurrency.
Speaking to the state-owned Channel 2, Jalali stated:
“Cryptocurrencies can help bypass certain sanctions through untraceable banking operations.”
Media outlet Mehr news agency reports that although the official thinks crypto is disruptive to the financial system, he thinks the country still needs to have a cryptocurrency.
Utilizing an ‘untraceable’ cryptocurrency could be a perfect avenue to help Iran reduce its over-reliance on SWIFT controlled payment rails, the general said.
“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.”
The Iranian government is keen to avoid sinking deeper into a financial crisis, having previously been at the wrong end of a banking embargo from SWIFT.
The general continued saying that cryptos are:
“[…] untraceable in the financial and monetary system of each country, but internationally they can provide us with great opportunities.”
Iran considering national cryptocurrency
Iran’s desire to develop a national cryptocurrency first came to the public arena in February this year via comments made by the Information and Communications Technology (ICT) minister.
In May, ICT minister Mohammad-Javaz Azari confirmed that a national crypto framework was ready for experimentation.
In September, the government officially recognized the crypto mining industry in what was seen as one of the last steps towards developing a national cryptocurrency.
Earlier, the country’s Informatics Services Corporation (ISC) and the Central Bank of Iran revealed plans for a state-sponsored digital asset pegged on the national fiat Rial.
U.S. President Donald Trump re-imposed economic sanctions against Tehran, leading to Rial’s historic declines.
However, news reports have suggested that Iran could be looking to evade the impact of sanctions on crude oil that come into full force this November.
But Iran’s president Hassan Rouhani has maintained defiance, stating today that the U.S “can neither stop Iran’s oil export nor reduce it to the amount [it] wants.”
The fiat-backed cryptocurrency is allegedly based on Hyperledger Fabric technology, an open-source blockchain framework originally developed by IBM.
According to the ISC, the first phase of the project will see users utilize the digital token as an interbank payment instrument. The token would then be integrated into society in a second phase to be used as a local payment currency.
Cryptocurrency for bilateral trade
In May, reports emerged that Iran and Russia were considering the use of crypto to further their bilateral trade as well as evading possible sanctions.
The two countries held discussions over the potential cooperation after U.S president Trump withdrew from a nuclear deal hammered during President Obama’s term.
Success in developing a state-backed crypto asset will purportedly see the two countries become the first to use a cryptocurrency in a bilateral exchange of goods, essentially escaping the full impact of the sanctions.
Whether having a national cryptocurrency would help Iran get past the sanctions is an interesting development to watch. Notable, however, is that at the time Rial’s value plummeted, many Iranian citizens reportedly began moving their funds into bitcoin and other cryptocurrencies.