September 23, 2022
The Islamic Republic says it has launched its new cryptocurrency, called the RamzRial, although it is not what anyone else in the world calls a cryptocurrency; it is really just an electronic version of the rapidly depreciating rial.
The RamRial can only be created by the Central Bank, which has exclusive control over it. Yet the whole point of cryptocurrencies is that are not under the control of any government.
Earlier, Iran announced that it has placed its first official import order using cryptocurrency—part of the continuing effort to dodge US sanctions.
Alireza Peymanpak, who is a vice minister of trade and the president of the country’s Trade Promotion Organization, announced August 9 that the purchase was worth $10 million.
He did not say what Iran bought with the cryptocurrency, but announced, “By the end of September, the use of cryptocurrencies and smart contracts will be widespread in foreign trade with target countries.”
Iran has been contemplating allowing the use of cryptocurrencies to pay for imports for more than a year. The Central Bank announced last August that banks and licensed currency exchangers could use cryptocurrency mined by licensed crypto miners in Iran to pay for imports.
Peymanpak did not say what kind of cryptocurrency Bitcoin, Ether or one of the multitude of others marketed was used for the purchase, or what country the product was bought from.
The Islamic Republic has been interested in cryptocurrencies as a way to get around US sanctions. Unlike regular currencies, cryptocurrencies are not regulated by governments.
In 2019, Iran’s Central Bank banned trading in crypto-currencies inside Iran. However, the government did allow bitcoin and other crypto-currencies to be used for international trading.
“These crypto-currencies and blockchain systems have many practical discussions in business affairs,” Peymanpak told the Mehr news agency in January. “If we neglect it, we will lose a major part of business opportunities.” He went on to say, “In our main markets, such as Russia, China, India and Southeast Asia, the use of crypto-currencies is popular.” Actually, it plays a minor role in those countries.
While crypto-currencies may be useful for Iranians trying to evade sanctions, action is being taken by the US to clamp down where they can. The New York Times reported in July that crypto-currency exchange Kraken was under federal investigation due to suspicions it had allowed users in Iran to buy and sell digital tokens. Another exchange, Binance, has also faced allegations that it has processed trades by clients in Iran despite sanctions.
Iran is one of the largest economies yet to embrace cryptocurrency technology, born in 2008 as a payments tool aimed at eroding governmental control over finance and economies.
Last year, a study found that 4.5 percent of all bitcoin mining was taking place in Iran, partly as a result of the country’s cheap electricity.
However, cryptocurrency prices are highly volatile, and, as a result, few businessmen see them as practical for large-scale trade payments.
The Central African Republic (CAR), one of the world’s poorest countries, has embraced crypto. It became the first African state to make bitcoin legal tender in April, and last month launched its own digital coin. El Salvador last year also adopted bitcoin as legal tender, though the project has been beset by public skepticism amid tumbling crypto prices.