The Central Bank of Iran (CBI) is on the verge of confirming that the country is to launch a national cryptocurrency backed by the country’s gold reserves, according to the Iranian-based MEHR News Agency. MEHR cited Shahab Javanmardi, an official from the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), as saying that a national cryptocurrency is on the verge of being unveiled and that it will be mined in accordance with an agreement between the CBI and a consortium of Iranian private IT firms.
Iran’s Strained Relationship with Cryptocurrency
Iran’s relationship with cryptocurrency is a strange one, with the seemingly inevitable launch of a national cryptocurrency going hand in hand with a ban on crypto use that dates back to 2018. Indeed, a government-backed token was mooted as far back as last summer when U.S. sanctions began to hit, but not much progress was made until earlier this year with the announcement of PayMon – a bank-backed cryptocurrency that some mistook for the official crypto-Rial. However, it was soon made clear by the government that this was not an officially sanctioned coin, with a resultant ban announced on the use of all unapproved cryptocurrencies.
America Powerless to Stop the Crypto-Rial
Javanmardi’s comments suggest that Iran’s plans for an official crypto-Rial are close to fruition, as he briefly discussed the token’s creation and function:
The Iranian cryptocurrency is backed by gold but its function is similar to foreign rivals. The domestically encrypted money is to ease optimal use of Iranian banks’ frozen resources.
Iran’s gold reserves equated to 907 tons in 2012, today worth approximately $41.3 billion, although this amount has almost certainly increased. With almost all this gold located abroad and the sanctions meaning they cannot sell or move it, issuing a cryptocurrency on the back of its value is a smart move. The cryptocurrency is almost certainly going to be for internal use only, meaning that the U.S. will likely have little to no power over stopping its, although they will naturally declare it illegal within America. Any official rollout of the crypto-Rial is likely to anger American authorities, and will do little to improve their already fractious relationship with cryptocurrencies in general.