Following US-led sanctions, the Global provider of secure financial messaging services, SWIFT, has parted ways with the Central Bank of Iran (CBI) from its financial banking system.
This however, has not deterred the Iranian government in a bit, as they have accelerated the development of their state-backed national digital currency.
The US-led sanctions will make it difficult for Iran to settle its international deals, according to a local media source, Informatics Services Corporation (ISC), a private tech wing of the CBI, confirmed that they had developed the said crypto-rial.
The company’s CEO Seyyed Abotaleb Najafi, said the digital currency would eliminate the role of international financial settlement groups like SWIFT. More so, it will be used in a distributed or one-to-one framework for transferring value without intermediaries.
He noted that the reason to launch a Crypto-Rial goes way beyond the aim of circumventing US sanctions.
However, the pilot program is aimed at testing the potential of blockchain and crypto technology in running a financial system on both interbank and retail level.
The state now plans to deploy the crypto rial on Iranian commercial banks in coming days which would enable them to use the tokens as a payment instrument in transactions and banking settlement, he added. The underlying value of digital rial comes from its fiat supply, Najafi revealed.
The ISC official said that while distributing the crypto version of rials among Iran’s commercial banks, they would block an equivalent value of the conventional rial in the CBI account. It would create a 1:1 peg between the crypto and fiat version.
Stockbroker Max Keiser supports the Iranian ifra of having its a state-owned cryptocurrrency, he said that blockchainization of state-backed fiats would eventually lead to the demise of the dollar; Iran is facing a short-term drastic problem and suggest the country should do a Russia or China – by increasing their gold reserves – and even that of Bitcoin, a digital currency untouched by the macroeconomic financial factors.
“Iran needs to get smart and start hoarding Gold and Bitcoin if it wants to avoid the worst of the fallout,” Keiser told RT. “It is already, smartly, pursuing bilateral energy deals outside of the $USD, but it needs to add value to its currency with reserves of Gold and Bitcoin.”
However, the international forex value of Rial, by default, will continue to be counted according to the dollar reserves of Iran. A real independent change would likely come only if countries across the world would agree to settle international deals with Iran in crypto-rial.
However, trading of Bitcoin and similar crypto assets is still banned in Iran.