Shut out of the global financial system by U.S. sanctions, Iran is reportedly on the verge of announcing the creation of a national cryptocurrency based on its rial.
The crypto-rial will be announced at the Electronic Banking and Payment Systems conference in Tehran on Jan. 29, Al-Jazeera reported.
The idea of the state-backed cryptocurrency was first brought up after the U.S. convinced the Belgium-based global financial messaging system SWIFT to cut Iran off, the news outlet said, effectively ending its ability to process financial transactions across borders, including the importation and exportation of goods.
The new cryptocurrency will roll out first as a means of facilitating transactions between Iranian banks and other local businesses and institutions active in the cryptocurrency space, and then may expand to the public as a way to pay for goods and services, Al-Jezeera said
And while the crypto-rial won’t “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 payments system that could emerge as an alternative to SWIFT,” the article said.
Read also: US sanctions Iranian Bitcoin addresses
Al-Jazeera noted that at a conference in November, Iran signed an agreement to cooperate in blockchain space with Russia and Armenia. In the aftermath of that announcement, the head of the Russian Association of Cryptoindustry and Blockchain said, “According to our information, an active development of an Iranian version of SWIFT is currently underway,” the article noted. It added that Russian President Vladimir Putin said Russia is “actively working” with other countries to establish a financial system that bypasses SWIFT.
This past April, Iran banned its banks from handling transactions in mainstream cryptocurrencies like Bitcoin over concerns about money laundering and other criminal activities, but the move was widely interpreted as a way to block capital flight in light of looming U.S. sanctions.
Another country under U.S. sanctions, Venezuela, recently launched its own national cryptocurrency, the Petro, backed by its oil revenues. But given the fact that Venezuelan oil production has collapsed, the economy is undergoing crippling hyperinflation estimated at more than 1.3 million percent annually, and reports that the U.S. looks ready to place sanctions on its oil, the Petro isn’t taken very seriously.