Iran’s central bank has issued a new report suggesting that the nation will ban the use of all “unofficial” cryptocurrencies. At the time of writing, it is not clear which digital currencies are deemed acceptable for payment in Iran and the report is still in its first draft.
A bitcoin and cryptocurrency ban in the country is nothing new. Iran officially banned the use of bitcoin and altcoins by financial institutions back in April 2018 as legislators considered the best approach toward regulation. According to an official statement released by the central bank at that time, the decision had initially been made in December of 2017 but was then being put into full effect.
At the same time, Iran has long considered the notion of introducing a national cryptocurrency for people to use as payment for goods and services. The decision to ban bitcoin and competing altcoins could be designed to give a new, national cryptocurrency latitude and prevent individuals from utilizing other digital assets over the national unit.
This national cryptocurrency would be backed by the rial, Iran’s state currency, making it a stablecoin — except that the rial has plunged to an all-time low over the past nine months thanks to economic sanctions reintroduced by President Donald Trump.
This may put Iran in a similar circumstance to that of Venezuela, a nation that introduced a national “cryptocurrency” following hyperinflation and the plummeting of its national currency.
Venezuela introduced the petro cryptocurrency as a means of battling economic starvation, but the asset has been enveloped in controversy since its official introduction in February 2018. As a result, the currency hasn’t brought about financial stability and it is not supported by cryptocurrency exchanges outside of Venezuela.
Iran has taken the same step against cryptocurrencies that it has against the euro. At press time, citizens are not allowed to hold more than 10,000 euros in their bank accounts, as officials feel this would deter from support and use of the rial.
Forcing residents to use a cryptocurrency that’s tied to an otherwise failing unit of fiat could subject them to similar circumstances of inflation and poverty. In addition, the asset is slated to do little in fighting the present U.S.-imposed sanctions and will keep Iran from becoming a global financial player, which may lead to harsher repercussions on its economy.