Iran’s Leaky Faucet: Citizens Bought $2.5 Billion in Cryptocurrency

The Iranian parliamentary economic commission's chairman spoke out about money being taken out of the country and into exchanges for Bitcoin and other cryptocurrencies.

In an interview with the Iranian newspaper Ibena, Mohammad Reza Pourebrahimi—chairman of the country’s parliamentary economic commission—revealed that over $2.5 billion left Iran via citizen purchases of cryptocurrency.

His first concern is the fact that although cryptocurrencies could help Iran circumvent sanctions, they’re still siphoning rials out of the country.

“Discussing virtual currencies and, of course, the creation of a national virtual currency, is one of the phenomena that has come across the world because of the way it facilitates economic interactions and bypasses sanctions. I believe the future of the world economy is in digital currencies. Due to the lack of transparency and lack of credible backing, the use of foreign digital currencies could create a serious risk to the country’s banking system. To address this issue, we should take steps towards the development of a national cryptocurrency,” he said.

It appears that Iran wants to follow Venezuela’s Petro strategy with a cryptocurrency that could be used to bypass sanctions. However, this might be more of a digital rial than a Petro, as Pourebrahimi doesn’t mention the idea of having the currency backed by any asset.

Instead, he said that a national cryptocurrency “could be a platform for multilateral monetary pacts between Iran and countries that have an interest in economic cooperation with Iran, but have not been able to due to the economic sanctions to date.”

Pourebrahimi’s agitation for this kind of move might indicate Iran’s concerned that US President Donald Trump won’t reach an agreement with Iran after declaring the one established by the previous administration null and void.

The ability to hop over sanctions is already accessible to countries via cryptocurrencies. North Korea also knows this all too well, as it’s been busy hogging up as much of it as it can via shady means.

The difference with Iran is that it wants to establish a central bank-issued currency, which may or may not work. These tokens can be de facto sanctioned like the Petro, which cannot trade in any of the major cryptocurrency exchanges around the world.

Without an exchange infrastructure supporting the national digital currency, it would be difficult to acquire coins without running a node on their blockchain and subsequently mining them.

North Korea’s solution had more immediate rewards since Bitcoin and Monero could be exchanged almost immediately for fiat currency.

If Iran seeks for its people to overcome sanctions imposed upon them, its government should see the fact that individual citizens own cryptocurrencies as a good thing. Ultimately, they can exchange them for foreign fiat with far fewer complications than if they would be using a crypto-rial.