The crypto rial has been in preparation for years; its introduction comes on the heels of the country’s introduction of cryptocurrency for foreign trade.
The Central Bank of Iran will make a pilot launch of a central bank digital currency (CBDC) on Thursda, the Iranian Chamber of Commerce has announced. The so-called “crypto-rial” has been in the planning stage for several years.
The launch of the crypto rial was originally planned for November, according to the Chamber, which said the CBDC was intended “to help improve financial inclusion and function as a powerful tool for the CBI to compete with other stable coins globally.” It added that experts within the country had concerns about businesses’ preparedness to use a CBDC, the public’s understanding of digital wallets and the effect the introduction would have on banks.
Iran begins pilot launch of crypto-rial tomorrow: Central Bank of Iran (CBI) said on Wednesday that it will begin the pilot launch of crypto-rial as the bank’s digital currency as of Thursday. https://t.co/6rWpGSkQJR pic.twitter.com/S9rDgEgjio
— Tehran Bazaar (@TehranBazaar) September 21, 2022
The crypto rial has also been seen as a means of counteracting the corruption that is pervasive in Iran. Development of the crypto rial began in 2018, and the Central Bank has been promising to trial the CBDC all year.
Al Jazeera reports that the CBDC will operate on the Borna platform, developed using the Hyperledger Fabric, an IBM open-source distributed ledger technology platform. The news agency adds that banks will trade paper rials for an electronic one. Since the platform is permissioned, the central bank will select banks to participate.
Borna wasy adopted in 2019 to help modernize the outdated Iranian banking system. According to an Al Jazeera source, the Borna platform will allow for the provision of fee-based financial services, although that will not be part of the current trial.
The use of cryptocurrency for payments inside Iran is prohibited, but in August, Iranians began to use crypto to pay for imports, leading to concerns among Iranian businesses about the lack of cryptocurrency regulation. The Iran Blockchain Association has made similar appeals in the past.