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Iran is Embracing Cryptocurrencies Amid Sanctions

Barely a month after issuing a warning against cryptocurrency trading, Iran is making an about turn and embracing digital  assets.

An official statement says the authorities are looking at ways to accelerate the use cryptocurrencies for daily transactions. A lot has happened since the central bank issued a ban on April 22. In between, the US cancelled its nuclear deal and reinstated sanctions against the country.

The move did not come as a surprise. Authorities knew people would soon turn to cryptocurrencies in the ensuing panic. The ban was exactly meant to stop that and protect the rial. Perhaps, they have seen the futility of it all. It could well be that the power of cryptocurrencies is becoming apparent.

The Parliamentary Commission for Economic Affairs of Iran is now looking at crypto as a way of reducing the influence of the dollar and the SWIFT system, used for interbank transfers.

US top diplomat Mike Pompeo has in the recent hours said “Iran will be battling to keep its economy alive.”

But despite the recent reversal, Iran has been exploring the benefits of using cryptocurrencies since at least 2016.

“This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system. We obliged the Central Bank in Iran to start developing proposals on the use of cryptocurrency,” RBC quotes Mohammad Purebrahimi, a central bank official as saying.

Circumventing Sanctions

However, states are increasingly turning to cryptocurrencies to circumvent international sanctions. Venezuela is a good example. The country’s president has aggressively been promoting El Petro, a state cryptocurrency backed by the country’s oil reserves. Aware of the intention, president Donald Trump issued an executive order banning it and any US citizen from dealing in it.

President Maduro has since given various figures about its status. The latest was that $3 billion had been raised in its presale. Analysts say there is little in terms of transactions on the public blockchain.

The Petro has long been linked to Russia. Investors can even wire their money through a Russian bank in exchange for the digital currency.

And there seems to be some Russian involvement in the case of Iran as well.

Mohammad Purebrahimi said Iran was cooperating with Russia on the issue. “They share our opinion. We said that if we manage to promote this work, then we will be the first countries that use the Crypto currency in the exchange of goods,” he is quoted as saying.

Tehran is to host an interbank working group on financial cooperation on July 5.

Iranians hold substantial amounts of cryptocurrencies used mainly for remittances.

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