Iran is Planning to Launch Its Own Cryptocurrency

Sep 14, 2018   |   by Marianne White   |   

On July 25, the Iranian Directorate for Scientific and Technological Affairs of the Presidential Office announced that Iran will launch its own cryptocurrency, the Iranian Govcoin. The coin will back and tokenize Iran’s fiat currency, the Rial, to aid domestic and international transactions. The Directorate’s deputy Alireza Daliri told Iran’s Press TV that many Iranian tech companies were working closely with the Central Bank of Iran (CBI) to develop this domestic digital currency.

The CBI has been historically apprehensive towards cryptocurrency. Back in February, the bank cut the idea to use Bitcoin as a solution for Iran being disconnected from all international payment networks, and cracked down hard on any financial institution offering cryptocurrency services.

Despite the general air of skepticism towards blockchain, Daliri said: “This currency would facilitate the transfer of money anywhere in the world. Besides, it can help us at the time of sanctions.” Since the U.S. pulled out of the Iran deal and restored the crude oil sanctions starting in November, the CBI’s hesitancy to enter the crypto-world was transformed into a sense of urgency. The release of the Venezuelan Petro (the national cryptocurrency set to launch in early August facilitated by Venezuelan president Maduro linked to the country’s oil reserves), and the pressure from U.S. President Trump on the Iranian regime, set the plan in motion to use cryptocurrency to bypass U.S. led economic sanctions.

However, there is much caution surrounding the release of this coin. Back in May, it was speculated that Iranian and Russian legislatures were working together on the cryptocurrency/sanctions issues. Iranian Parliamentary Commission for Economic Affairs chairman Mohammad-Reza Pourebrahimi posed these concerns in Moscow during a meeting with the Chair of Federation Council Committee on Economic Policy, Dmitry Mezentsev. Pourebrahimi said that Russia “shared our opinion. We said that if we manage to move this work forward, then we will be the first countries that use digital currencies in exchange of goods.” It was also rumored that during Venezuela’s development of the Petro, Russia also aided the country and might have even given them the idea.

This new cryptocurrency, as with the Venezuelan petro, poses two large issues to the cryptocurrency community. The first issue is the lack of decentralization. A federally backed coin from Iran or Venezuela, or perhaps even North Korea will most likely be controlled, centralized, or at the very least influenced by the state and ruling authority. This completely undermines the entire theory behind decentralized digital currency, and opens the door to other regulations, limits, laws, etc, to be placed on already established cryptocurrencies. The second is bad public relations for the crypto-world. The crypto community has been fighting the images of the Silk Road and hackers and trying to showcase why cryptocurrencies could benefit society. However, it becomes increasingly more and more difficult to do that when entire countries are attempting (successfully) to bypass sanctions placed on them, and boost international investment and funding through unregulated ICOs. How can trust be built between the crypto community and the non-crypto world when the cryptocurrency is released with the explicit intent of skirting established laws? There seems to be big changes happening in the international crypto space. One might have to decide between what is best for the individual user and what is best for the community and movement as a whole.

Marianne White