An Iranian parliament member has suggested that digital currencies be used in attempts to work around returning economic sanctions from the United States.
Iran and Digital Currencies
The idea was brought forth by MP Mohammad-Reza Pourebrahimi who recently met with Dmitry Mezentsev, the Russian Chair of the Federation Council Committee on Economic Policy, in Moscow.
Pourebrahimi was quoted as saying that digital currencies could provide a way for Iran and Russia to avoid U.S. dollar transactions, and that the coins could even be used as a replacement for the SWIFT inter-bank payment system — a protocol used by the majority of financial institutions across the globe to transfer money.
Pourebrahimi also said that the Central Bank of Iran (CBI) had been asked by Parliament to start developing proposals for using digital currencies. Similar to the way that digital currencies can help citizens under oppressive and unstable regimes, they can also help sovereign governments bypass sanctions enforced by foreign powers.
The MP, who chairs the Iranian Parliamentary Commission for Economic Affairs, said he had discussed this topic in the State Duma’s Committee on Economic Policy and that Iran had established cooperation with Russia on the issue.
“They [Russia] share our opinion. We said that if we manage to move this work forward, then we will be the first countries that use digital currencies in the exchange of goods,” he said.
In relation, Russia’s Mezentsev noted that “interbank relations between our countries should be of great importance” considering the shared backdrop of international sanctions currently in place against both countries.
Using Digital Currencies to Fight Sanctions
The idea to use digital currencies in international trade emerged in Tehran after the country’s officials complained that the U.S. was “terrorizing” companies attempting to do business with the Islamic Republic. Because of recent moves by President Trump, Iranian’s are also seeing European companies restrict trade over fears that they will fall afoul of the sanctions.
In anticipation, Iran started developing a local cryptocurrency in 2017, which was launched earlier this month — echoing moves by the similarly sanctioned South American country Venezuela, who released the state-issued “Petro” earlier this year.
Priscilla Moriuchi, director of strategic threat development at fintech company Recorded Future, said she is skeptical about the Petro’s success and feels the same way about Iran’s experimental cryptocurrency:
“The Petro will struggle to be exchangeable for hard currencies such as the dollar or the euro and this will limit its appeal to investors and users. Iran is likely to experience some of the same hurdles if it decides to create its own oil-backed cryptocurrency,” she said.
More recently, over $2.5 billion has left the country through digital currencies, according to Pourebrahimi. This is despite the fact that Iran “banned” Bitcoin trading in April of this year — although it is still possible to purchase coins if users utilize “mixers” to hide the origin and destination of transactions.