Iran Announces Gold Backed National Cryptocurrency

The Tehran News agency has reported that Iran intends to launch a
gold-backed cryptocurrency. This comes less than a week after President
Trump slammed virtual currencies on Twitter amid tensions between the
historic foes. The New agency reported the development on its English
website.

Accordingly, the Central Bank of Iran (CBI) has approved the issuance
of new cryptocurrencies. This is according to the CEO of Iranian
Information and Communication Technology (ICT) FANAP, Shahab
Javanmardi. 

Shahab described the measure as follows:

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

As a matter of fact, banks like Parsian Bank, Bank Pasargad, Bank
Melli Iran and Bank Mellat were working with blockchain startup Kuknos
Company on this as early as January. The Financial Tribune reported that
the gold-backed cryptocurrency project will be called Paymon.

The Legal Status of Cryptocurrency in Iran

The Iranian government had earlier this year signaled some opposition
to Bitcoin and mining in general. This is because the government
decried the use of power which is a feature of cryptocurrency mining.
Notably, power is subsidized in Iran and many miners took advantage of
this opportunity to have large mining farms.

Mehr news reported that CBI was looking to ban private cryptocurrency
and encryption services like in China. That said, the status of Bitcoin
in the legal system is still quite unclear. Different government
agencies have given conflicting positions in the recent past. In this
regard, the conundrum of crypto regulation is as unclear in Iran as it
is in most countries globally.

Accordingly, Javanmardi urged the government to retain its policy on
limiting Bitcoin in Iran. This is because authorities seized 1,000
bitcoin mining machines in Yazd Province just last month. The Iranian
government seems keen on ensuring that Bitcoin miners don’t profit off
its considerably cheap power costs. 

Ironically, the American government has accused the Iranian
government of actually using Bitcoin to circumvent sanctions. This is
because Bitcoin is immutable and not subject to centralized control.
Therefore, the Iranian government seems to have a “do as I say and not
as I do” stance on Bitcoin.

The Role of Politics 

 Cryptocurrency in 2019 is undoubtedly becoming a political hot potato. This is because governments have realized that they cannot afford to ignore cryptocurrency. The announcement of the Libra project by Facebook, in particular, has brought unprecedented regulatory attention.

The Trump administration has been historically tough on Iran. With
sanctions coming thick and fast, every avenue of commerce and politics
is an avenue for battle. There is a direct correlation between the
collapse of a country’s currency and warming up to cryptocurrency.
Venezuela has also signaled intentions to develop petroleum backed
cryptocurrency to deal with similar hyperinflation issues.

Iran is similarly in the middle of currency turmoil after more
sanctions from the USA. The fact that cryptocurrency is a way to escape
the monopoly of SWIFT transfer in finance is lucrative. As such the
country is simply taking a logical measure to cope.

Iran is not alone in exploring cryptocurrency. In fact, more than 70 percent 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 the ante.

image by Shutterstock

source: asiacryptotoday.com