Iran’s Crypto Blueprint on Track

EghtesadOnline: Informatics Services Corporation, the principal entity in charge of designing Iran's national cryptocurrency, has announced new details about the nascent currency's blueprint.

News ID: ۷۴۵۹۳۱

28 August 2018

According to Aboutaleb Najafi, the CEO of ISC—the executive arm of the Central Bank of Iran in charge of operating the country's banking automation and payment services network, the Iranian cryptocurrency has been designed using the Hyperledger Fabric platform, IBENA reported.

It is a blockchain framework implementation and one of the Hyperledger company's projects hosted by Linux Foundation.

Intended as a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to follow a plug-and-play format, according to Financial Tribune.

Earlier, Information and Communications Technology Minister Mohammad Javad Azeri-Jahromi had announced that he was working on plans to devise the platform for creating the Iranian cryptocurrency, in cooperation with CBI and the Post Bank of Iran.

"The cryptocurrency has no limitations concerning issuance and may be mined with rial as its backing to whatever volume the central bank decides," he said.

The national cryptocurrency has been developed on a private blockchain, meaning that it cannot be mined by the general public unlike popular cryptocurrencies like Bitcoin that have been developed on public blockchains.

During its first phase, the cryptocurrency will be used as an instrument of payment for interbank transactions. In the second phase, it will expand to support micro payments by the general public.

"The role of commercial banks in this regard is to verify transactions and maintain the ledgers," the ISC chief said, noting that the private blockchain will be accessible to certain commercial banks in the first phase, without naming them.

After the infrastructure is fully in place and the trial period is over, the blockchain will be made accessible to all banks, fintechs and monetary players.

Najafi said that until its full implementation, the infrastructure will be improved based on the opinions and proposals of experts.

"The goal of creating this infrastructure is for players in this sector to use a standard infrastructure and prevent formation of too many platforms in addition to cutting down on the costs of integration," he said.

KYC Protocols

Najafi said another main issue considered in employing the cryptocurrency is blockchain-based know-your-customer (KYC) protocols.

"A customer will only need to offer their credentials to only one bank and then other banks will be able to use it on the blockchain," he said.

The ISC announced on July 26 that it has commenced test transactions on a rial-backed virtual currency and will unveil it within three months.

The blueprint for Iran's national cryptocurrency is nearing conclusion just as the central bank is expected to announce its related regulatory framework.

On Sunday, Nasser Hakimi, CBI's deputy for innovative affairs, hinted that when the regulator discloses its crypto policies in late September, it will lift a previous blanket ban on virtual currencies and most likely declare them legal.

On Saturday, an official, who recently attended a high-level meeting at the National Cyberspace Center with President Hassan Rouhani concerning cryptocurrencies, announced that an initial draft of the document on the national cryptocurrency has been prepared at the behest of the president and awaits CBI's approval.

On Monday, another official with the National Cyberspace Center said the final document concerning cryptocurrencies has been drafted and will be made public in three months.

"The High Council of Regulations [with NCC] has held eight or nine meetings to decide on blockchain technologies and cryptocurrencies, while expert work concerning this issue has been concluded," Saeed Mehdiyoun, NCC's deputy for regulation, told IBENA.

"NCC has announced that this document must be a concerted effort to offer a national roadmap concerning blockchain and cryptocurrencies wherein two goals in three main areas must be defined."

The official pointed out that the two goals are to expand international transactions and safeguard national interests and wealth.

The monetary sector, capital market and cryptocurrency mining industry constitute the three areas.

Mehdiyoun reiterated that CBI ultimately remains the sole entity with the main responsibility of regulating cryptocurrencies.

Mehdi Masoumi Esfahani, a member of Money and Capital Market Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture, said on Monday the private sector is also focusing on cryptocurrencies.

The commission has asked TCCIM authorities to establish an office to impart awareness regarding cryptocurrency.