Iran is experimenting with cryptocurrencies as a means of circumventing U.S. sanctions.
The Central Bank of Iran (CBI) will pilot a digital currency and amend central bank laws to include cryptocurrencies, according to new central bank governor, Ali Salehabadi.
Iran’s central bank digital currency (CBDC) is thought to build upon an earlier announcement by the central bank relating to the development of a national digital currency, or a digital rial.
A previous CBDC prototype was designed using IBM’s Hyperledger Fabric. But Iran’s renewed development of a CBDC includes a strong political component.
Negotiations over the stalled Iran nuclear deal and a reluctance by US President Joe Biden to offer any sanctions relief suggests Tehran may consider the CBDC as a mechanism to skirt the US embargo.
Until recently, the government outlawed cryptocurrency trading and mining to safeguard electricity supplies in the summer months. Approximately 4.5% to 7% of the world’s cryptocurrency mining is conducted in Iran. The country has some of the cheapest electricity prices in the world.
