ICT Ministry Prepares National Crypto Prototype

EghtesadOnline: Minister of Information and Communications Technology Mohammad Javad Azari-Jahromi said on Saturday his ministry has prepared a preliminary prototype of the national virtual currency in collaboration with the Central Bank of Iran-affiliate Monetary and Banking Research Institute.

News ID: ۷۸۲۴۴۸

29 April 2018

Azari-Jahromi said Post Bank is also a party to the development of the prototype and last week announced that it has been finalized, IBENA reported.

The announcement comes, as CBI last week banned the country’s banks from dealing in cryptocurrencies, including Bitcoin, over money-laundering concerns.

According to a statement published on CBI’s official website, the decision to ban all monetary and financial institutions from using Bitcoin and other cryptocurrencies was taken during the 30th meeting of the High Council of Anti-Money Laundering on Dec. 30, 2017, Financial Tribune reported.

“Since a variety of virtual currencies have the ability to transform into instruments for money laundering and terrorist financing and as the means to transfer money by criminals, the supervisory arm of the central bank imposed a ban on employing virtual currencies to banks to prevent the occurrence of crime through virtual currencies,” CBI said in its statement.

Prior to the directive published on Sunday, the central bank had not prohibited the use of cryptocurrencies and only sought to warn people of the potential risks inherent in them.

CBI is also set to release a regulatory framework document on cryptocurrencies by the end of the first half of the current fiscal year in September and the recent directive seems to have prepared the ground for the same.

Azari-Jahromi added that studies on the current prototype should give rise to questions that will lead to the final version of the national cryptocurrency.

“When it comes to virtual digital currencies, we cannot go back in time because the future of global structure is based on blockchain [technology] and for this very reason, we should follow up on that to get results,” he said.

The ICT minister on Friday linked the recent cryptocurrency ban by the regulator to the country’s ongoing currency issues.

“The ban on trade of cryptocurrencies and Bitcoin by CBI as the financial and currency regulator of the country is to prevent the flight of foreign currency,” he said.

Buffer Against Sanctions

Azari-Jahromi acknowledged that the ban is also in line with strengthening the country against sanctions.

Iran faces restrictions on using the greenback in its transactions and also using the US financial system.

“All cryptocurrencies have the ability to circumvent sanctions because they are not under the supervision of the US financial regulator and this issue naturally exists concerning [Iran’s] national virtual currency,” he said on Friday.

Azari-Jahromi emphasized that the planned currency will be backed by some sort of assets, but did not elaborate.

Iran’s currency slid by as much as 25% against the US dollar in the four months to March 20.

In response and as per the government’s decision, the US dollar’s exchange rate for all purposes, including imports, travel, overseas students and research projects, was set at 42,000 rials.

The government also required on April 18 that all state bodies use euros in their financial reports instead of US dollars as part of its efforts to reduce reliance on the American currency.

The new policy is expected to encourage government bodies and firms linked to the state to increase their use of the euro at the expense of the dollar.

The decision to ditch the US dollar in official reports had been announced last year by CBI Governor Valiollah Seif, but at the time he had stopped short of saying that the European currency would replace it.