The Central Bank of Iran (CBI) announced that it will begin the pilot launch of its Central Bank Digital Currency (CBDC) on Thursday. The announcement was made on the Chamber of Commerce, Industries, Mines, and Agriculture’s news portal. The CBI is calling the new digital currency “crypto rial.”
The CBI’s aim is to convert traditional banknotes into programable entities. One of the highlights of this digital currency is its high-end security. The currency has been designed in a way to be completely traceable. According to the CBI announcement, the crypto rial can be traced even if the data on the smartphone is compromised.
The digital currency is not intended to compete with other national or international cryptocurrencies. Central bank digital currencies, in contrast to other cryptocurrencies, are centralized, non-anonymous and compliant with anti-money laundering regulations.
Former CBI Governor Abdolnaser Hemmati said in May 2021 that the institution has already created a “basic version” of a digital rial. Ali Salehabadi, the CBI’s current head, stated earlier this month that the bank had the infrastructure and regulations required for a CBDC.
Is Crypto rial part of Iran’s plans to evade US sanctions?
It should be noted that Iran is one of the countries that is sanctioned by the United States. The country has been under one form of US sanction or another for many decades. As such, it has viewed crypto as a means of evading said sanctions. Earlier this year, Iran made a $10 million import order to be paid in crypto. The state even approved the use of crypto for trade and imports. Hence, the state is no stranger to crypto and its uses. Therefore, it is not surprising that the country is moving ahead with its CBDC plans.
However, as mentioned in the official announcement, the crypto rial is not intended to be a competitor to other currencies. It is possible for Iran’s internal use. Officials hope that the digital currency would increase their control over the national currency.
Crypto Rial will run on the Borna platform. It is a permissioned distributed ledger technology. Only the central bank can decide which entity gains access. Moreover, it means that the currency cannot be mined, like Bitcoin.