Iran’s central bank is preparing to start the pilot phase of its digital currency project in the near future, its new director has told local media representatives. The monetary authority is also preparing to move forward with plans to reform the legislation that governs its own activities.

Iran prepares pilot project for sovereign digital currency

Iran’s “national cryptocurrency” will soon enter its pilot phase, recently appointed Central Bank of Iran (CBI) governor Ali Salehabadi has revealed. Speaking to reporters after his first meeting with lawmakers, the senior official said the regulator is now studying the potential risks and benefits associated with the initiative. Quoted by IRIB News and the Financial Tribune, he explains:

The pilot test will begin after approval by the Currency and Credit Board.

Salehabadi, who has headed the CBI since October 6, did not provide any further details regarding the Iranian central bank’s digital currency (CBDC). According to the English-speaking business daily, the new phase of the project should be in line with previous plans for the development of a national cryptography.

The report notes that three years ago, Informatics Services Corporation, the CBI subsidiary that operates the country’s banking and payment automation services network, was tasked with developing a sovereign digital currency. A CBDC prototype was designed using the Hyperledger Fabric platform, later statements from its representatives revealed.

It became clear that the digital version of the Islamic Republic’s national fiat, the rial, was being developed on a private blockchain. Unlike cryptocurrencies based on public blockchains such as Bitcoin, the Iranian state-issued coin will not be mined.

The public was never informed of the progress of this initial project until it was more recently announced that a “crypto” plan is underway. Officials stressed that Iranian crypto was going to be a digital currency disseminated by the CBI and not a decentralized cryptocurrency that could be used for small cashless transactions, the publication said.

New commission tasked with preparing amendments to Iranian central bank law

Besides the announcement of the digital currency, Iranian media have also learned that the new central bank leadership and members of the Majlis have agreed to create a joint commission to reform the legislation regarding the CBI. Its members are expected to quickly finalize a long-awaited plan to update the law that governs the activities of the central bank.

Governor Salehabadi also said that a special task force will be formed to clarify the positions of the bank and the government regarding cryptocurrencies. While Tehran’s executive authorities have cracked down on crypto investment and trading, allowing only licensed banks and money changers to use coins minted in Iran to pay for imports, lawmakers have opposed restrictive policies. They believe more favorable regulations would help Iran bypass US-led sanctions and boost its economy.

Mining has been the only crypto-related sector that has received more clarity in terms of regulation. Iran recognized digital currency mining as a legal industrial activity in 2019 and introduced a licensing regime for entities involved in the business. And although mining farms have been blamed for power shortages during the extremely hot summer of this year, restrictions have since been lifted on licensed cryptocurrency miners who number more than 50, according to the state power company Tavanir.

Do you think Iran will eventually issue its own digital currency? Share your expectations in the comments section below.

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