Wednesday, March 22, 2023

Iran Develops Its Own Digital Currency

Iran says an experimental model of an Iranian cryptocurrency has been developed based on the block-chain technology, and can significantly facilitate financial transactions in the country when created.

Iranian Minister of Communications and Information Technology Mohammad Javad Azari Jahromi says the Iranian cryptocurrency is being developed under a joint project involving the ministry’s ICT Research Institute, Central Bank of Iran’s Monetary and Banking Research Institute and the state-run Post Bank.

“Last week, in a joint meeting aimed at exploring the progress of the project, it was announced that the experimental model is ready,” he said, according to a report by the Persian-language Islamic Republic News Agency (IRNA).

The announcement came after the central bank last Sunday banned Iranian banks from dealing in foreign cryptocurrencies, including Bitcoin.

“Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them,” a central bank circular said, based on a ban on cryptocurrencies passed by Iran’s anti-money laundering body in December.

Cryptocurrencies’ underlying block-chain technology eliminates the need for a third party and allows for instant, irrevocable and secure transactions.

Iran joined the growing list of nations to crack down on cryptocurrencies, including India and Pakistan who made roughly similar moves in early April.

Azari Jahromi says the CBI ban does not cover home-grown digital currencies and it does not mean Iran will resist against cryptocurrencies, which could shape the future of finance world.

“The CBI ban on Bitcoin dealings was made out of concerns such as [it could lead to] foreign currency flight and that the [volatility in the crypto market] could lead people to lose their assets. But Bitcoin is not the one and only cryptocurrency,” the minister said.

Dozens of countries such as China, Russia, and Singapore have already developed their own digital currencies, as they address needs of consumer anonymity and transaction efficiency.


National Cryptocurrency Not in Conflict with Sharia

In a Farsi interview with banking news website IBENA on Friday, Azari Jahromi said the Iranian cryptocurrency will be backed by assets, so it will have no Sharia (Islamic rules) problems.

Iranian clerics have expressed concerns that doing business with virtual currencies could have problems, as Islamic Sharia believes money should hold real value or be backed by such assets.

The Iranian cryptocurrency will be backed by assets, just like the Malaysian cryptocurrency which is backed by gold and the Venezuelan one which is supported by oil, Azari Jahromi said.

Referring to reports by western media that Iran is developing cryptocurrencies as a means to circumvent financial sanctions by avoiding traditional financial avenues, the minister said, “All cryptocurrencies are capable of circumventing sanctions because they are not under supervision of the US financial regulatory body, and the national digital currencies are naturally capable of this.”

Both Venezuela and Iran are currently the targets of heavy sanctions imposed by the US.

Iran moved this month to formally unify its official and open market exchange rates and banned money changing outside of banks, after its currency rial plunged to an all-time low earlier this month.

Government officials described the sudden plunge as unnatural, suggesting it could be caused by an economic plot hatched by the US and its allies.

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