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Iran could unveil its digital currency to avoid sanctions momentarily

January 28, 2019, 4:26AM EDT

Iran is anticipated to announce a state-backed digital currency at E-Banking and Payment Systems according to Al Jazeera. The conference, the theme of which this year is "blockchain revolution", takes place from Jan. 29-30 in Tehran.

The Iran-issued digital currency is expected to have the following features:

  • Backed by the rial, the national currency of Iran
  • Developed by Informatics Services Corporation and built on Hyperledger Fabric
  • Central Bank of Iran will be the issuer
  • It will initially be available for Iranian banks as an interbank payment instrument
  • The second phase will as an instrument for retail payments in Iran

Some of the largest Iranian banks were disconnected from SWIFT, a financial messaging service, in November after the U.S. reimposed oil and financial sanctions against Iran. In early November, the Governor of the Central Bank of Iran said the country had already started working on a SWIFT alternative. Later in November, Iran signed a blockchain cooperation agreement with Russia and Armenia. Russia also announced that it is actively working with partners on establishing a financial system fully independent of SWIFT. 

Iran could also use its digital currency to avoid sanctions to trade with partner countries. It is, however, not going to give the citizens access to the international financial system as the sanctions won’t allow for it to be listed on digital currency exchanges.

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