Iranian Banks Banned from Using SWIFT, Government Might Launch its Own Cryptocurrency

  • Iranian banks were prohibited from using bank-to-bank messaging system SWIFT.
  • Other political and economic sanctions have led to Iranian government possibly launching its own cryptocurrency soon.

The Islamic Republic of Iran is reportedly planning to announce the launch of its own digital currency during the upcoming two-day Electronic Banking and Payment Systems conference.

Iran May Announce Its Own Crypto At "Blockchain Revolution" Themed Conference 

According to the Al-Jazeera, the isolated nation’s cryptocurrency project might be officially introduced at the conference on January 29th in the capital city of Tehran. Local news sources have said the theme of the fintech-related gathering is “blockchain revolution.”

Last summer, Iran’s government had revealed details regarding its plans to develop a state-controlled cryptocurrency - after US president Donald Trump’s administration announced it was planning to continue imposing political and economic sanctions on Iran.

In November 2018, several Iranian financial institutions were prohibited from using SWIFT, the bank-to-bank messaging system that allows two parties to confirm details regarding cross-border transactions. Banks that cannot use SWIFT are usually unable to pay for imported goods and they also don’t have access to a reliable payment method for exports.

Banned From SWIFT, Working On Alternatives

In order to freely engage in domestic and international trade, Iran’s government is planning to roll out its own cryptocurrency in phases. The first stage of the rollout will involve the introduction of a rial-backed crypto token, which will reportedly be used to conduct transactions between Iranian banks. Later on, the nation’s authorities may allow local residents to pay for everyday goods and services using the state-backed cryptocurrency.

Iran’s blockchain-based cryptocurrency could potentially help the so-called rogue state conduct international transactions with other nations and it might serve as an alternative to SWIFT and the fiat-based payment system. Although there are no official reports of Iran’s government discussing the use of its cryptocurrency with other nations, Abdolnasser Hemmtai, the governor of Iran’s central bank, had said Iran was looking to develop an alternative to traditional payment methods.

On November 14th, Iran had entered a trilateral blockchain cooperation agreement with Russia and Armenia during the ChainPoint 18 conference held in Yerevan, Armenia. After the agreement was finalized, Yuri Pripachkin, the head of the Russian Association for Cryptocurrency and Blockchain, had revealed: 

According to our information, an active development of an Iranian version of SWIFT is currently underway.

CBDCs Cannot Replace Bitcoin

Yashar Rashedi, an Iranian blockchain developer, told Al-Jazeera that he thinks central bank digital currencies (CBDCs) “can't replace the likes of bitcoin due to their centralized nature, but their existence is harmless." Rashedi added:

Even as CBDCs may never find widespread everyday use among the general public, they may be able to offer some new features to startups and developers that had to work with centralized bank APIs before them.

Towards the end of last year, there were reports that Iranian commercial banks would have first access to the rial-backed digital currency as it was completing its “pilot stage.”

In November 2018, it was also revealed that the state-backed cryptocurrency was being developed for the Iran’s central bank by Informatics Services Corporation (ISC).

Bitcoin’s Price Fails to Surpass $8,000 as Crypto Market Loses $12 Billion

The cryptocurrency space has recently lost about $12 billion in only 24 hours, at a time in which the flagship cryptocurrency bitcoin failed to remain above the $8,000 mark. The cryptocurrency has more than doubled in value so far this year, but is seemingly struggling to keep rising.

According to CryptoCompare data, one bitcoin is currently trading at $7,600 after falling 3.6% in the last 24-hour period. The cryptocurrency started seeing its price drop shortly after hitting $8,000, and has recovered from a $7,500 low in intraday trading.

Bitcoin's price performance in the last 24-hour period

The cryptocurrency’s price performance so far this year has seen interest in it grow, so much so that it hit a 14-month high in Google search interest this month.  Cameron Winklevoss, a co-founder of the popular Gemini cryptocurrency exchange, recently stated that investing in bitcoin is “not as crazy as sitting on the sidelines when the future of money is literally being built before your eyes.”

Despite the recent price drop, some analysts have revealed they’re bullish as BTC’s mining rewards halving event occurs next year. This, according to some, helps remind users of the cryptocurrency’s scarcity, as block rewards are cut in half.

The recent price drop could potentially be a delayed reaction to Tether, the company behind the popular USDT token, revealing it has invested some of its reserves in BTC and “other assets.” While some claim the firm bought extremely small amounts of crypto with its reserves, New York Supreme Court Judge Joel M. Cohen questioned the paradox, stating:

Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying.

Bitcoin’s drop saw most top altcoins follow suit, with some dropping as much as 7% in the last 24-hour period. Litecoin, Bitcoin Cash and Zcash are among the least affected tokens, being down between 4% and 5.2%.

Ethereum’s ether, XRP, and XMR are all down by about 6% in said period, while other cryptocurrencies like Dash, Cardano, and QTUM dropped by as much as 10%. Bitcoin SV, which recently surged by 80% after Craig Wright filed a copyright registration for the Bitcoin whitepaper, is down by little over 1%.