Refuse To Use Crypto As A Payment Instrument, Iran Prepares To Launch Digital Rial

Iran rejects crypto and will issue digital rials. (Unsplash)

JAKARTA – In the midst of the explosion of cryptocurrencies in various parts of the world, the Iranian government does not want to make cryptocurrency an official medium of exchange. The rejection of crypto was conveyed by Iran's Deputy Minister of Communications, Reza Bagheri Asl.

Even so, Reza Bagheri made this statement when the Central Bank of Iran (CBI) announced its plans to issue the digital rial. The Central Bank of Iran itself will soon implement a digital rial pilot in the near future.

“We do not recognize payments in cryptocurrencies,” said Reza Bagheri Asl.

Bitcoin.com News reports government officials comment on the latest resolution by the Digital Economy Working Group on crypto assets. He pointed out that the use of any foreign currency is beyond sovereignty and is against Iran's monetary and banking laws.

"So, we will absolutely not have a regulation that recognizes payments with cryptocurrencies that are not ours," said Bagheri Asl, quoted from Iranian news portal Way2pay.

“Iran has its own national cryptocurrency, so no payments will be made with non-national cryptocurrencies,” he stressed.

The deputy minister added that in order to prevent risks for Iranian citizens, digital asset exchanges in the country will be subject to a set of rules similar to those that apply to the stock market and other currencies. "Cryptocurrencies must be regulated and the banking system must be considered," said Reza.

Tehran authorities have in the past considered allowing Iranian businesses to use the decentralized digital currency for settlements with foreign partners as a way to circumvent Western financial sanctions. What they are currently focusing on, however, is the launch of a digital version of the national fiat currency, the rial.

The Central Bank of Iran recently informed banks and other credit institutions about regulations related to so-called “crypto rials”. They have been in development for some time. They apply to the printing and distribution of central bank digital currencies (CBDCs). CBI will be the sole issuer and will determine the maximum supply.

According to Way2pay, the digital currency is based on a distributed ledger system that will be managed by an authorized financial institution and capable of implementing smart contracts. The infrastructure and guidelines for the CBDC have been finalized and will be piloted in the near future, the publication said.

The crypto rial will be issued under the terms of the law governing the issuance of banknotes and coins, the report noted. CBI will monitor the economic impact of the digital currency and manage the impact according to the monetary policy of the authorities. Users will be able to make transactions with CBDCs only within Iran's territory.