Iran looks closer than ever before to taking a leaf out of Venezuela’s book and creating its own state-backed crypto token. Similarly to Venezuela, Iran has been hit by a raft of US sanctions that have left the country’s economy in tatters with the fiat currency in freefall – leaving it virtually worthless. Not to mention the US has made it almost illegal for any other country to accept the Iranian rial. In Venezuela the government had created the Petro token and purportedly tied it to the value of the country’s oil in order to bypass US sanctions and sell oil to other nations. However, most recently India declined to buy oil from the sanction-hit nation even at a 30% discount for using Petros.
Other Cryptos Not an Option
Iran knows that using other cryptos is not a viable option, as these exchanges will simply shut the accounts of Iranian nationals – much like what happened to our Iranian interviewee. In addition to this, Iran would also have to backtrack on its crypto ban. This would make the Iranian government look weak and like they are buckling under the fresh wave of US sanctions.
Using the Venezuelan Model
Much like Venezuela, Iran has a lot of oil deposits scattered around its country. The new government-backed crypto could also be tied to the national oil reserves to create a price that is based on goods rather than trade volume and demand. Iran could use a straight cut and paste of the Venezuelan model; however, this model has hit some bumps in the road. Nobody wants to touch the Petro as it is seen as a method to circumvent the US sanctions and other countries fear they too will be punished by the US for interacting with Venezuela. Iran would need to come up with a solution to this issue, and a better national exchange to purchase the new crypto on – Venezuela’s barely works at the best of times.
Crypto for the Greater Good
If Iran can show that they are using the cryptocurrency – and the proceeds from it – for good uses, there is a chance more countries would be willing to stand with them and accept the new crypto as payment for goods and services. Venezuela came up with the idea of using the Petro to build homes for the homeless, paying contractors in the cryptocurrency.
The new Iranian cryptocurrency would be created largely to circumvent sanctions imposed by the US. While it would also give the country the chance to stabilize its economy and prevent it from heading into hyperinflation. The government needs to be careful with how they create the cryptocurrency and create a solid white paper that outlines exactly how it works. If the government can create a mineable currency, it might even get listed on popular exchanges around the globe – who knows!
