What does Iran Want To Do With Cryptocurrencies?

By Rishma Banerjee

It has been reported by the Tehran News agency that Iran intends to launch a gold-backed cryptocurrency. This comes at a time when Iran is under tremendous pressure from the Trump administration, which only recently slammed virtual currencies on Twitter. Reportedly, as per the CEO of Iranian Information and Communication Technology (ICT) FANAP, Shahab Javanmardi, the Central Bank of Iran (CBI) has approved the issuance of new cryptocurrencies. He said,

“Iran’s cryptocurrency will be supported by gold, but its function is similar to other cryptocurrencies. The crypto asset is designed to maximise the use of Iranian frozen bank assets.”

Several banks like Parsian Bank, Bank Pasargad, Bank Melli Iran and Bank Mellat were working with blockchain startup Kuknos Company from January of 2019. The Financial Tribune reported that the gold-backed cryptocurrency project will be called Paymon.

Initially, the Iranian government had somewhat opposed Bitcoins and its mining in general, because the government decried the use of power which is a feature of cryptocurrency mining. It must be noted that power is subsidized in Iran and many miners took advantage of this opportunity to build up large mining farms.

However, the hue and cry about the legality of crypto have been a global issue. In this regard, the conundrum of crypto regulation is as unclear in Iran as it is in most countries globally. Javanmardi had urged the government to retain its policy on limiting Bitcoin in Iran as authorities had seized 1,000 bitcoin mining machines in Yazd Province just last month. The Iranian government seems to be ensuring that Bitcoin miners don’t profit off its considerably cheap power costs, even though ironically, they have been accused by the American government actually using Bitcoin to circumvent sanctions.

Cryptocurrency in 2019 is gaining more and more political significance as the governments have realised that it cannot be ignored any more. Iran is not alone in exploring cryptocurrency. In fact, more than 70 per cent of the world’s central banks are looking at the impact of such a coin. The announcement by the Central bank of Iran will certainly up to the ante.