Ever since a nuclear deal between Iran and the United States broke down, Iran has been suffering thanks to harsh US sanctions. It was the United States who broke down the deal, and it was again the United States who imposed sanctions designed to stifle the Iranian economy. To skirt around these harsh and unfair sanctions, Iran has been pondering the creation of its own crypto for some time. However, after an announcement on the Central Bank of Iran’s (CBI) website, it looks like the Crypto Rial is in the final testing stages and about to launch.
Recognition of Bitcoin and Ethereum
In the announcement on the CBI’s website, a wave of crypto regulations was also spotted. Amongst these regulations was a plan to formally recognize Bitcoin and Ethereum. While these regulations don’t explicitly permit the use of these two cryptocurrencies as a form of payment, it does however give them a form of legitimacy and legality in Iran. All transactions in Iran must be settled in Rials – or Crypto Rials once it goes live – otherwise the two parties involved could receive a hefty fine.
A Last Resort
For Iran, creating its own cryptocurrency has been a last resort. It has stores of gold that could help it see out Trump’s presidency without the need to fight the harsh sanctions, but America has issued warnings to all nations who try to deal with Iran – deal with Iran and we will impose sanctions upon you. This has led to more than $350 million worth of gold to be trapped in a German vault that the Iranians can’t touch. This move has effectively forced Iran’s hand into creating its own crypto, so that it can deal with other countries without fear of the US getting involved.
Regular Cryptos Won’t Do
Unfortunately, Iran and its citizens have been burned by other cryptos before, with America showing how powerful it really is by banning a “decentralized” currency. The US Government forced crypto exchanges to freeze or close accounts belonging to Iranians or anyone accessing an account from an Iranian IP. This resulted in the seizure of more than 500 Bitcoin – leaving many with no money to buy food or pay for shelter. On top of this, the US can already track every single Bitcoin transaction, meaning if any other nations are caught using Bitcoin to transact with Iran, they too will feel the full weight of the American sanction hammer.
The Crypto Rial is set to be built on a private blockchain – similarly to Ripple – meaning that the US government can’t snoop on transactions or steal money. Exactly how the crypto will gain its value – either by being pegged to the value of oil, nuclear missiles or the existing Rial – but we will undoubtedly see this information emerge in the next few days. Using cryptos to bypass US sanctions is becoming a common theme and could well be the tipping point of power as the US loses control over the world.