Thursday, 5 July 2018

Iranians spent billions in virtual currency as Trump withdraws from nuclear deal.

Mohammad Reza, chairman, Economic Commission, Iran Parliament, revealed that Iranian citizens have spent billions in virtual currency. Unfortunately, it has all been sent outside the country. Reza was quoted by the Financial Tribune, saying

“Despite the fact that a minority of the people of our country are customers of virtual currencies and their new markets, more than $2.5 billion has fled the country following their purchase while a majority of people active in this area are in it for speculative activities and macro profits”

As reported by Financial Magnates, the revelation by Mohammad comes just a day after Trump, U.S president, indicated that he will be leading the U.S out of an agreement made back in 2015 between P5+1 nations (China, France, U.K, U.S, and Russia + Germany) and Iran. In the deal, the US was to lift the economic sanctions put on Iran and Iran would honor the deal by scaling down its nuclear involvement.

Although Reza indicated Iran’s involvement in cryptocurrency, he noted that a domestic virtual currency would be their ideal choice instead of using a ‘foreign digital currency’. The Economic Commission chairperson said,

“The future of world economy will be decided by digital currencies, but the use of foreign digital currencies can cause serious hazards for the country in its banking system because of their lack of transparency and absence of an entity backing them”

Considering the recent developments in Iran on virtual currencies, the government and the country’s central bank seem not to be reading from the same script.

Last year, the ICT deputy minister in Iran indicated that they are laying a solid ground to bring Bitcoin onboard. Then, in early this year, Iran was reportedly looking into developing a state-backed cryptocurrency. But the journey towards cryptocurrency in Iran was halted when Iran’s central bank, in April this year, restricted other financial institutions from dealing with crypto-related accounts/institutions citing money laundering and other illegal activities being funded using digital money.

Although the ICT ministry has a new head who strongly believes in the digital coins, we are yet to see the official stand that Iran will take concerning virtual currencies, whether they will adopt the ‘foreign’ or they will develop their own. “The ban (by Iran’s central bank) does not mean the prohibition or restriction of the use of digital currency,” said Mohammad Javad, the new ICT head, as quoted by IRNA, a state news outlet.

Do you think Iran using billions in virtual currency is a sign they  may use cryptocurrencies to circumvent Trump’s economic sanction?

Join the conversation in the comments section below.



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