In May, Donald Trump announced that the US would abandon the nuclear agreement and restore sanctions against Iran. Earlier today, the state controlled media outlet Press TV announced that the middle-Eastern country is planning to launch its own cryptocurrency in an effort to circumvent the sanctions and limit the damage caused to the Iranian economy.
Iran has a long history of sanctions, and indeed Obama’s decision to remove constraints on trade with the country was the exception rather than the rule in recent years of US policy. The far-reaching controls announced by Trump three months ago have had a range of impacts which could – if unchecked – prove truly deleterious for the Iranian economy.
The Trump administration has demanded that buyers of Iranian oil – by far the country’s most important export – must reduce the size of their orders and seek to identify alternative suppliers. Other important industries in the country will also be significantly impacted. The policy has contributed to further devaluations of the Iranian currency, the rial. In 2013, $1 was worth around 30,000 rials, but that same dollar is now worth 90,000 rials. The sanctions have also caused huge capital flight from the country, as much as $60 billion over recent years.
Press TV reports suggests that the country’s Directorate for Scientific and Technological Affairs have developed a plan for the digital currency, designed both to streamline money transfers and trade and to help mitigate the effects of the sanctions. Spokesman Alireza Daliri reported that fintech companies in Iran would oversee the development of the coin, though he acknowledged that there remained work to do “removing pre-launch flaws.”
Of course Iran are not the first government to explore crypto. Venezuela’s Nicolas Maduro masterminded the Petro coin in his beleaguered south American country, and reports continue to surface that Vladimir Putin is exploring the potential for a state-backed cryptocurrency for Russia. It remains to be seen whether the Iranian coin, or indeed any state-backed digital asset can truly establish itself and find a use-case as local and international currency.
