Iran Developing Cryptocurrency After Central Bank’s Ban?

Iran recently announced that it has banned trading of Bitcoin and other cryptocurrencies. One of their reasons is to prevent capital outflow and to help stabilize their currency. Recently, there’s a development that contradicted this move. Iran is also dabbling in blockchain technology hoping to make its own digital currency. A government minister mentioned on Saturday that Iran is developing a local cryptocurrency.

Dealing with Sanctions

The main reason Iran’s central bank prohibited local banks from dealing with cryptocurrencies is the fact that it is trying to halt a currency crisis. The currency crisis has been caused mainly by the US. Trump even wanted to get the support of its European allies in putting economic pressure against Iran.

Information and Communications Technology Minister Mohammad Javad Azari-Jahromi mentioned that the local cryptocurrency will be an exception to this. He said that “The central bank’s ban does not mean the prohibition or restriction of the use of the digital currency in domestic development”.

Developing a Local Cryptocurrency

Azari-Jahromi mentioned that “Last week, at a joint meeting to review the progress of the local cryptocurrency project, it was announced that the experimental model was ready”. Azari-Jahromi has been known as Iran’s youngest minister. He is also known as an innovator. He tweeted in February that his ministry’s Post Bank had already been working with experts trying to design an experimental cryptocurrency that will be presented to the country’s banks for their approval.

Growing Interest in Muslim Countries

There is already a growing interest in cryptocurrencies in Muslim countries. A Muslim scholar from Indonesia published a study called Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain. This study was made by Muhammad Abu-Bakar of Blossom Finance. He mentioned in the study that Bitcoin along with other cryptocurrencies “fulfill the economic roles of money”. And because of this, it is considered an accepted asset in Islam.

Venezuela’s Own Cryptocurrency

Iran’s move to have their own cryptocurrency isn’t also surprising. In fact, Venezuela made a similar move as well.  The reason behind Venezuela’s move to create Petro is somewhat the same as that of Iran. Their goal is to be able to transact using the cryptocurrency and stay away from US economic sanctions.

The truth is that there really is no unified consensus whether or not to ban or allow cryptocurrencies. That is considering the reality that it is still a young market and blockchain technology is still in its infancy to this point. Should Iran push their plan to have their own cryptocurrency or no?

US President Trump will provide a decision on May 12 whether or not the US is going to restore its economic sanctions on Iran. This could easily be a blow to the 2015 pact that was made between Iran and six other superpowers.

It is understandable that Iran is planning to curb the use of cryptocurrencies within Iran. By design, blockchain technology was made in order to help individuals during times of economic crisis. And for this reason, Iran’s central bank simply made the smart move in order to prevent the outflow of capital from happening.