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After staunch rumors, Iran has launched a gold-backed cryptocurrency called ‘PayMon’ in cooperation with four local banks and Ghoghnoos Company. The banks partnered are Bank Pasargad, Persian Bank, Bank Melli Iran, and Bank Mellat.
It has been reported that PayMon (Persian for covenant) will be used to issue tokens tied to gold. PayMon will also be used to tokenize the bank’s excess properties and assets.
Viliollah Fatemi, Ghoghnoos director said:
“The token can function like [sic] a wallet and channel the excess assets into the economic cycle. We seek to extend the technology for accelerating the pace of bank transactions.”
Ghoghnoos has suggested that one billion units of PayMon will be offered initially. They have also stated that the cryptocurrency will be available for purchase on Irana Fera Bourse, an over the counter market for securities and other financial instruments based out of Tehran, Iran.
This isn’t the first time a government has launched a state-backed cryptocurrency, Venezuela did the same last year; Venezuela launched the Petro cryptocurrency in February 2018. The decision received both excitement and controversy. There were claims that the Petro was backed by the country’s oil reserves; however, the whitepaper on the topic made no mention of this. Venezuelan President Maduro said that billion of Petro units have been sold within the first few days of the ICO, however, this was called into question, along with the success of the scheme overall. A report released in August 2018 suggested that the Petro was not functioning as a currency.
There has been speculation that Iran has launched the cryptocurrency in order to escape US sanctions, not without merits; the sanctions are related to US-Iran nuclear concerns. Because cryptocurrency transactions are difficult to trace, it has long been suspected that Iran may decide to go this route in order to evade the US trade sanctions. It would likely not work for larger companies, but small and medium-sized companies would be able to fly under the radar as they conduct business with the US.
The US Treasury (which already took action against Iranians) also warned cryptocurrency marketplaces and companies that sell cryptocurrency endeavor computers that they should not provide services to Iranians.
The cryptocurrency mining project for the PayMon has reportedly already been given the go ahead. Cryptocurrency hasn’t always been supported in Iran, but it looks as though that is changing now. Bitcoin and other cryptocurrencies can’t be used as a payment in the country, but restrictions on cryptocurrency wallets and ICOs have been removed.