As everybody knows that they have been getting sanctioned by the US for years. Currently, they have been cut off from Swift, meaning that they are unable to send money out of the country which has really kind of decimated their currency in a way. The US has good intentions to this, the problem is that you’re going to start seeing new virtual currencies that could provide workaround as this economy take a hit from the US sanctions. So, basically what they’re trying to do is they are trying to create their own virtual currency peg to their money so that they can avoid this these sanctions.
In the past couple of weeks as well, Russia is looking to create their own cryptocurrency and they are also looking to potentially buy Bitcoins to try and get around these sanctions as well. A lot of these countries are getting smarter, they are getting away from the dollar, we all know that the dollar, over time is going is going to continue to deplete as it has, since its inceptions. So, eventually it’s almost inevitable that that’s going to happen and other countries are going to follow soon with what Iran is doing, with what Russia is doing and with many other countries are doing. When it comes to these sanctions, they are trying to get around it by opening up their own digital currency. This is why cryptocurrency is pretty much going to take over the world.
Iran, inches closer to unveiling State-backed cryptocurrency. Shut out of the Global Financial System, Iran is inches closer to work around the US sanctions with the possible unveiling of its first state backed crypto currency in the near future. The virtual currency is anticipated to be announced at the annual two-day Electronic Banking and Payments System conference which Kicks of January 29th in the capital of Iran. The theme of this gathering is “Blockchain Revolution”. The blockchain is the first distributed ledger technology that allows a network of computers to verify transactions between two parties as opposed to validating them through a trusted third party entity details of Iran’s new cryptocurrency were revealed last summer after the Trump administration started re-imposing sanctions over alleged “malign activities”.
The biggest blow to Iran’s economy came in November when some of its bank were barred from Swift, the Belgium-Based Global Messaging System that facilitates cross-border payments for the world. They were cut off from the world, for most part. Counties exclude from Swift cannot pay imports or receive payments for exports, leaving them crippled financially and having them rely on alternative methods of moving money. It’s kind of amazing that other countries are the ones that run these systems, whereas, every country does not have their own way of doing it, they all have to basically use the Swift System in order to move money virtually throughout the world.
What they are trying to do right now is you can send money anywhere in the world, not instantaneously, but within a couple of days, possibly within a couple of hours within these countries. Ripple XRP is going to help in order to solve that problem for the world, but as for sanctions with countries, they are coming up with different ways and methods around these sanctions, which is basically what we’re talking about here, which is the cryptocurrency they are trying to create. Iran’s cryptocurrency is expected to be rolled out in phases, first as a Rial Digital Token to facilitate payments between Iranian Banks and other Iranian Institutions active in the crypto space and later, possible as an instrument for the Iranian public to pay for local goods and services.
While it would not directly facilitate payments between Iran and other countries, the state-backed digital currency could lay the groundwork for Iran to join a blockchain based international payment system that could emerge as an alternative Swift. So we’re already looking for alternatives to Swift and again, Ripple XRP is on the forefront of that, will they be using Ripple XRP to transfer money? That is the question that will still remain a mystery, because Ripple XRP is a US based company and it’s going to be sure that they are obeying by those rules or whatnot.
The technology is there, they can create their own technology and make their own blockchain so they can kind of get around these issues. There is no official confirmation of active participation between Iran and other nations in this area or when any potential multilateral initiative will yield results, but development in recent months provide clues. On November 5, the day of the second tranche of US sanctions against Iran came into effect, the governor of the Central Bank of Iran, said the regulator has already commenced work on an alternative anticipation of the Swift disconnect.
Crypto-Rial releases their currency, on the other hand, during the ChainPoint 18 conference in Yerevan, Armenia on November 14, Iran signed a trilateral blockchain cooperation agreement with Russia and Armenia. Again, mentioned Russia, they are getting big on crypto so definitely looking for ways around the US dollar, we are all going to see a big blockchain revolution in the future or we’re already seeing it for the most part, but definitely as years go in, we’re going to see more and more of this.
Following the finalization of the agreement, the Russian signatory Yuri Pripachkin, who heads the Russian Association of Crypto Industry and Blockchain, said, “According to our information, an active development of an Iranian version of Swift is currently underway”. So they are already coming up with their own version, probably just tires of having to obey by the rules of other countries. Russian President, Vladimir Putin, later said the Russia is actively working with partners to establish financial systems that are fully independent of Swift, without naming other partner countries. Given the long ties between Tehran and Moscow, and the fact that both are sanctioned by the US, it standards to reason that they would eye blockchain technologies to overcome financial restrictions. Members of the Commonwealth of Independent States (CIS) are other likely parties to a potential blockchain-based multilateral financial system.
Following in the footsteps of regional rivals Saudi Arabia and the United Arab Emirates, who recently launched a joint cryptocurrency, Iran could also use the crypto-rial or a similar sovereign digital currency to skirt sanctions and trade with other partners. The “Blocking Iranian Illicit Finance Act” was introduced by Senator Ted Cruz on December 13 to sanction Iran’s upcoming sovereign cryptocurrency identifies the government of China, Russia, Venezuela and Turkey as potential state actors that might aid in developing the crypto-rial. So, again the United States is basically trying to stop it, not sure how they’re going to do that, why this hasn’t been done yet, it’s still kind of beyond us and why everybody needs to use the Swift system is also beyond our knowledge.
Beyond facilitating payments as part of bilateral or multilateral agreement with strategic partners, the crypto-rial will fall short of combating US restrictions. Coupled with the digital currency’s centralized nature, the sanctions will ensure it will have no place in credible international exchanges. It will fail to give ordinary Iranians an international reach they have been bereft of for decades, just like currency it is backed by. That being said, a digital rial will certainly have local advantages. As blockchain and cryptocurrency developers pointed out that one has to note that central bank cryptocurrencies (CBCC’s) are not aimed at replacing common cryptocurrencies. They certainly can’t replace the like of Bitcoin due to their centralized nature, but their existence is harmless.
They are trying to create a way, a more convenient way for them to move money because people still got to get services and goods although there’s going to be sanctions or whatnot, and sanctions are placed because they don’t want to behave and they don’t want to play and play by the rules here, with all their issues that they have over there in Iran. But at the same time, these countries are getting smarter and this is just something that we have to be aware of. Even as CBCC’s may never find widespread everyday use among the general public, they have be able to offer some new features to startups and developers to had to work with centralized bank API’s before them.