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What started out as a test of how much blockchain technology can offer could turn out to be all that Iran needs to mitigate the aftereffects of being bolted out of the global financial system. Before the U.S. sanctions which barred most of Iran’s banks from SWIFT, the Iranian government was already making active efforts to create a financial system that could help strengthen their dying economy.
Being excluded from SWIFT means that Iran could no longer receive payments for export or pay for imported goods. This is more like crippling their economy by sending them out of the global market. In a bid to bolster the growth of their economy, Iran’s government is set to launch the state-backed cryptocurrency, expected to be formally announced in the Electronic Banking and Payment System conference scheduled for today 29 Jan. 2019.
Although the soon-to-be-launched cryptocurrency is not an alternative to SWIFT – that is, it doesn’t allow Iran to participate in the global market – it is considered a groundbreaking step towards which other bigger projects can be built. The state-backed cryptocurrency is proposed to roll out in several phases with the first phase known as a Rial-backed digital token. The Rial-backed digital token is proposed to help facilitating payments between institutions and banks within the country that are active in the crypto space. Iran’s government also plans to extend the Rial-backed digital token to facilitate payment for local goods and services.
However, speculations exist that Iran in collaboration with other countries such as Turkey, Russia, Venezuela, and Armenia are cooking up a direct replacement for SWIFT – that is a crypto-backed financial system that would allow them to export and import goods without going through SWIFT.
The multilateral digital currency dubbed Crypto-Rial is supposedly a joint cryptocurrency project like that of Saudi Arabia and the United Arab Emirates that would allow Iran to trade with its partner countries. Furthermore, some concerns still exist due to the centralized nature of the anticipated cryptocurrency; this would make it fall short of traditional cryptocurrencies such as Bitcoin. Notwithstanding, the digital Rial will go a long way to help boosting Iran’s economy. This was asserted by Yashar Rashedi, a blockchain and cryptocurrency developer.
Crypto enthusiasts are optimistic that this is a good start for the industry. Having a state-backed cryptocurrency will help lay the foundation for cryptocurrency entering into the mainstream. They are hopeful that the crypto mining as an industry will be approved in the state and crypto exchanges will receive the blessings of the government in no time. Yet, Iran’s authoritarian regime makes it doubtful if the Crypto-Rial will actually assist in making Iranian society more liberated, or will it be just another measure to control the citizens.