Iran’s first digital currency is one step away from launching, according to a report published by Iranian media group Ibena.ir on November 9th.
The unnamed token, backed by the Iranian Rial, awaits final approval from Iran’s Central Bank before being issued to banks across the country.
Ibena spoke with Seyyed Abotaleb Najafi, CEO of the company designing and issuing the token – Informatics Services Corporation (ISC) – who confirmed the launch is imminent.
“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.”
The timing is ideal, considering the reinstatement of oil and financial embargoes on Iran. But will crypto ideals of freedom and individuality also make the cut?
Big Brother Takes on Bitcoin
Similar to Bitcoin and other cryptocurrencies, Iran’s token will operate on the blockchain to store financial transactions.
But that is where any similarity to decentralised cryptocurrencies ends.
Unlike Bitcoin, which some people claim will ‘democratise’ the world’s financial system, Iran’s digital currency will be closely monitored by the government.
ISC, the company behind the token, is affiliated with the Central Bank of Iran and controlled by the government. The irony is not lost on international observers, as they watch an authoritarian regime adopt technology often associated with libertarian movements.
Unsurprisingly, ISC’s CEO sees the Iranian token as an evolved Rial currency — for everyday use and under the government’s thumb.
“In order to realize renovation and create new infrastructure in our banking system, banks’ back-end processes which [are traditional] should be changed and evolved,” said Najafi.
The technology may advance, but Iran’s authoritarian leanings have not. People cannot mine the token, as control is restricted to Iranian officials.
ISC is making sure that the digital currency is for the people, but certainly not by the people.
Fighting Fire with…Blockchain?
Iran is banking on this digital currency to bypass economic sanctions imposed by President Trump to cripple Iran’s missile program.
In a one-two punch of political pressure, Belgium-based financial service SWIFT has also withdrawn from Iran. This leaves the country locked out of the dollar-dominated financial system, and all the benefits that come with it.
As Al Jazeera reported, SWIFT is the central nervous system of the financial world. When a country’s banks are disconnected “[the nation] can’t pay for imports and can’t receive payment for exports.”
Iran may be landlocked, but now it’s an isolated island when it comes to global trade.
Fortunately, to decrease economic disturbance, eight countries were given a six-month sanctions waiver by US authorities.
Without access to the dollar, Iran is essentially reduced to bartering for humanitarian aid and basic supplies. But it’s better than nothing.
The Iranian digital currency needs to launch before the waiver expires, and ISC CEO Seyyed Abotaleb Najafi says it will.
But the stakes are high and time is running out.