Among the countries of the Middle East, Iran is the nearest to creating the national digital currency. Rank imposes obligations: the country has been under sanctions for a long time. However, is it the only thing that encourages the development of a cryptocurrency project? Let's get straightened out what are the other motives pushing the country's authorities to adopt innovations. And why the Cabinet of Ministers of the Islamic Republic is considering a bill on the legalization of the turnover of other virtual assets in the country.
In Tehran, they began to discuss the introduction of virtual means of payment to circumvent the US sanctions in 2017. Since then, the project has passed a lot of approvals in various ministries and departments. According to the head of the Iranian Informatics Services Fintech-Corporation, Seyed Abutaleb NAJAFI, the relevant package of documents is under consideration at the Central Bank, since, according to the plan, the coin will be emitted by the main financial regulator and will be bound to the fiat currency - the Iranian real. Najafi also noted that the technological component of the cryptocurrency was in a high degree of readiness, and as soon as the startup was approved by the Central Bank, the financial asset could be put into circulation. However, in the beginning, it will be available only for interbank and cross-border payments: Iranian authorities did not multiply entities and followed the way of two other Islamic states - Saudi Arabia and the United Arab Emirates, who plan to introduce digital payment units through the traditional banking sector.
The head of the corporation Seyed Abutaleb NAJAFI also stressed that the bind to real is very important from the point of view of financial stability, so the emission of the cryptocurrency will not be an additional issue of money that can rekindle inflation that is already high but, on the contrary, each virtual coin will become a digital mirror of a specific digital fiat coin unit. Accordingly, the circulation of those cash and electronic reals, which will have digital copies, will be stopped. This means a smooth replacement of classic electronic money with digital.
The interest of the Islamic Republic authorities in the development of the market of virtual assets is illustrated by one more fact: on December 12, the Iranian Cabinet of Ministers considered a number of measures to regulate the turnover of tokens. Abolhassan FIRUZABADI, the Secretary of the Supreme Council on Cyberspace, stated that because of the popularity of digital technologies and the growing unofficial use of cryptocurrencies, there was a need to create the necessary legislative framework that would ensure transparency and security of transactions. "Because of the importance of cryptocurrencies, the Supreme Council on Cyberspace insists that the legal analysis work should be completed as soon as possible," he said.
Such a rush is down to three reasons. And the first one is sanctions. American policy towards the Islamic state is becoming more expensive for the latter. For example, only a month after the introduction of the sanctions package, the export of Iranian oil to Turkey decreased from 227,000 barrels per day to 70,000 and the volume continues to fall. And despite the fact that China and India have increased their purchases to 360,000 and 300,000 barrels per day, this did not help Iran fill the budget, the revenues from the sale of raw materials are steadily declining. “We do not have vessels to export oil in time,” a government source told the local news agency. Tankers are mostly owned by multinational transport companies, many of which do not want to confront the US government. Those who are not afraid of a great power wrath are in the minority in the market. Therefore, export costs are steadily increasing.
This state of affairs had a negative effect on the official exchange rate of the real, which fell from 36,000 for $1 to 42,000, while on the black market it rose from 43,000 reals at the beginning of the year to 128,000 by December.
The disconnection of the credit institutions of the Islamic Republic from the SWIFT system was added to these problems, which made it extremely difficult to settle payments even for contracts that have already been completed. Iran and India have already switched to payments for oil in rupees, but this is just one independent transaction channel, and there are tens of thousands of suppliers and importers.
The Islamic Republic needs to create a universal digital payment system as soon as possible, which will replace SWIFT and a unified payment unit instead of the US currency. Generally speaking, the competitors - Saudi Arabia and the United Arab Emirates - are trying to achieve the same thing.
By the way, the second reason for the rush to the cryptocurrency project is connected with the dollar. The black currency market is growing in the country. Against the background of the rapid real crash, citizens rescue their savings as they can. But the problem is that the main reserve currency in the shadow economy of the main antagonist of the United States is still the US dollar. Moneychangers manage to deliver currency even in pizza boxes.
Iranian authorities tried to struggle with illegal currency transactions: at the end of the summer, 67 people were arrested over this charge and now they face the death penalty. However, even such a threat does not affect people who have been brought to poverty.
Seeing the futility of punitive measures, the government took an unprecedented step – it legalized the secondary foreign exchange market. Now, you can trade dollars quite officially, there are only restrictions on the number of transactions and their daily amount.
Undoubtedly, this was a step of despair from the leaders of the Islamic Republic. But reputational losses can be neutralized by finding a worthy replacement for the dollar. Decentralized currencies that are not emitted by any of the states and are not regulated by any central banks can be such an alternative. Bitcoin, like the overwhelming majority of other
digital coins, is politically neutral. The only thing is missing - to legalize the market of digital assets.
And finally, the third reason is the struggle for the Islamic financial sector. Iran, as the inheritor of the Persian superpower, positions itself as the leader of the East, but without control over the economy and finances in the Islamic world, such an enviable position can be forgotten. Today, the question is simple: the first to release a digital asset will take a step into the future of a fundamentally new monetary system that will take over not only the economic initiative but also the mind of people.