Iran and Russia could turn to cryptocurrency as a solution to evade Western financial sanctions and reduce their dependence on the US dollar.
Iran has been struck by a monetary crisis in recent months after its fiat currency, the rial, plunged to historic lows against the US dollar leading up to US president Trump formally withdrawing from the Obama-era nuclear deal with Iran. Russia has also seen international sanctions imposed by the United States and the European Union and a number of other countries in recent years following Russia’s military intervention in Ukraine.
In an effort to circumvent US-dollar-based commerce and escape their dependence on the global interbank system operated by SWIFT, Tehran is suggesting cryptocurrency as a solution in high-level discussions with Moscow, according to a report by Russian publication RBC citing major news agency Interfax.
Iran’s Parliamentary Commission of Economic Affairs has already “obliged the Central Bank of Iran to start developing proposals for the use of cryptocurrency”, revealed the authority’s chief Mohammad Reza Pourebrahimi.
“Over the past year or two, the use of cryptocurrency has become an important issue,” the official reportedly said. “This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system,” he added.
The official made the revelation following a Moscow meeting with Dmitry Mezentsev, head of Russia’s Federation Council Committee on Economic Policy.
Notably, Pourebrahimi confirmed that he had already held discussions with the Russian Parliament’s Committee on Economic Policy with the report suggesting that Iran ‘has established cooperation with Russia’ in their cryptocurrency pact.
They share our opinion. We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods.
As reported in February, Iran’s ICT Minister Mohammad Azari-Jahromi confirmed the state’s effort to develop a state cryptocurrency powered by blockchain technology. “A pilot model for review and approval will be presented to the banking system of the country,” the minister said at the time, hinting at a nationwide rollout if the cryptocurrency proved successful.
Russia is also working on a state cryptocurrency, the cryptoruble, on Putin’s orders.
In meeting with senior government figures, Putin’s economic advisor Sergei Glazev told officials that a state cryptocurrency would serve as a ‘useful tool’ to circumvent sanctions.
He notably added:
We can settle accounts with our counterparties all over the world with no regard for sanctions.
Russia has been reported to be heavily involved in the development of Venezuela’s ‘petro’, the world’s first state cryptocurrency. The petro was first announced by Venezuelan president Maduro in December as a financial instrument to evade US-led economic sanctions before its official launch in February. Kremlin officials have dismissed any suggestions of being involved in the petro’s development and have rubbished a Time report that claimed Russian president Vladimir Putin personally signed off on helping Venezuela with the petro.