Iran set to launch a state-controlled cryptocurrency to dodge sanctions

Iran has announced plans to launch a state-controlled cryptocurrency that will be backed by the rial and developed on the Linux Foundation-led open-source Hyperledger Fabric technology.

The Iranian cryptocurrency – which is referred to as the digital rial – will be set up in a way that it cannot be mined and its transaction records can only be accessed on a private blockchain.

“The (crypto) infrastructure is supposed to be as an ecosystem available for Iranian banks and active companies in cryptocurrencies area after being tested and reviewed,” the Iranian state-run news agency IBENA reported.

The Iranian National Cyberspace Centre (NCC) revealed the draft of the cryptocurrency. The deputy director in charge of drafting regulations for Iran’s Supreme Cyberspace Council, Saeed Mahdiyoun, has confirmed the NCC’s plans to launch a cryptocurrency.

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Mahdiyoun also said that by the end of September, the Central Bank of Iran is expected to make public its official stance on the cryptocurrency.

The Iranian government banned cryptocurrency operations after money laundering concerns were raised late last year.

Reasons for the new crypto

The move towards crypto in Iran is reportedly aimed at circumventing US sanctions that will be put in place shortly, and also to facilitate remittances to and from the Middle Eastern country.

Venezuela, which has also been hit with massive sanctions from the United States and its allies, also recently launched a digital currency called Petro, which many experts say is not cryptocurrency because it is not decentralised and is backed by the country’s oil reserves.

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Iran’s Informatics Services Corporation/Core Banking said it would use the new crypto as an interbank payment tool and as a local payment form.