In a bid to circumvent economic sanctions imposed by the US, Iran is launching its own state-backed digital currency. The coin will be pegged to the rial and will be created using the HyperLedger Fabric. According to Al Jazeera, the country could unveil the currency before the end of this month.
What Is the Currency All About?
The new currency could be unveiled during the Electronic Banking and Payment Systems conference in Tehran, which begins on Tuesday. The conference is focused on “blockchain revolution” this year. According to local sources, the currency will be backed by the rial and issued by the Central Bank of Iran. It will be developed and designed by the Informatics Services Corporations using HyperLedger Fabric.
In the beginning, the coin would act as a fiat-backed token which will facilitate transactions between banks and other active crypto institutions in the country. However, it could later be used to buy local goods and services as well. As the currency will be highly centralized and Iran is facing economic sanctions, it is unlikely to be added to cryptocurrency exchanges around the world which means that Irani citizens will not have access to international resources.
Iranian Financial Woes and Russian Influence
Iran has been facing sanctions from the US. Some of its banks were also barred by Belgium based global messaging system used by banking entities for cross-border payments, SWIFT. Consequently, the country’s imports and exports suffered because they cannot process payments for either. However, with this currency at hand, the country could be preparing for joining a new parallel international payments system working alongside the SWIFT network.
Venezuela has tried to launch a state-backed currency before but to no avail. The case with Iran could be different. Though there is no official confirmation about any international partnerships on its state-backed crypto project, Tehran and Moscow have been close. The country is working on creating an alternative to SWIFT, and it signed a trilateral agreement with Armenia and Russia in November last year to co-operate on blockchain development.
Russian representative Yuri Pripachkin confirmed Iran’s plans for developing an alternative payments system and later, President Vladimir Putin said that they are “actively working” on such a project with partner countries. He did not reveal the names of its partners.