Iran to Launch Public Pilot for Digital Currency on Kish Island
Why Trust Cryptonews
The Central Bank of Iran (CBI) formally unveiled on June 18 the public pilot launch of the digital rial, the nation’s central bank digital currency (CBDC). The pilot program is scheduled to debut on June 21, marking the beginning of the Iranian calendar month Tir.
Iran CBDC to Rollout Publicly on Kish Tourist Island
, the public rollout of Iran CBDC will take place on Kish Island, a popular tourist destination in the Persian Gulf known as a free trade zone where visitors from many countries can enter visa-free.
The digital rial will enable users on the island to make cashless transactions by simply scanning a barcode, eliminating the need for physical currency or bank cards. The public rollout builds upon a successful pilot program launched in 2023.
🇮🇷WOULD YOU TRUST IRAN’S CB CRYPTO CURRENCY?
The Central Bank of Iran (CBI) announced the launch of a pilot scheme for their CBDC, the Digital Rial, on the island of Kish.
The new rollout will expand its digital rial pilot program, which started in 2023.
CBI:
“Unlike other… pic.twitter.com/EV4xARRYn1
— Mario Nawfal (@MarioNawfal) June 19, 2024
Iran is not the only Asian country piloting a CBDC. Last month, Cryptonews reported on how Israel launched its digital shekel test for domestic payment.
In its bid to test the CBDC’s use cases, Israel’s central bank will provide a sandbox environment and API layering to facilitate participation from financial institutions, fintechs, and other stakeholders.
Meanwhile, China has already taken important steps in this area. China’s digital yuan, first piloted in 2019, has gained substantial traction. By February 2024, over 29 million digital wallets had been created in Suzhou, with residents and businesses conducting transactions worth over $416 billion in 2023, as reported by Crypto News.
Concerns over Iran Evading US Sanctions via CBDC
There have been concerns about Iran’s development of a central bank digital currency (CBDC) to evade sanctions imposed by the US.
In February 2024, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on the Informatics Services Corporation (ISC), a Central Bank of Iran subsidiary responsible for developing the digital rial CBDC and other payment systems.
Along with ISC, OFAC also sanctioned two firms in Dubai—Advance Banking Solution Trading and Freedom Star General Trading—and one company in Turkey for procuring technology on behalf of ISC related to information security items controlled for national security and anti-terrorism reasons.
Iran’s membership in BRICS has led to a push for collaboration on payment systems and digital currencies as a US dollar alternative.
This aligns with Russia’s stance to promote local currencies and reduce dependence on the US dollar. The move comes after sanctions restricted their access to Swift for international transactions.
The sanctions on the two countries resulted in Iran partnering with Russia on CBDC, which will be gold-backed for cross-border payments.
Iran confirms working with Russia on CBDC, tokenized assets for payments⬇️
“ACRA, the local rating agency, discussed the practicality of using tokenized commodities in February. Iranian counterparties would have to onboard to the DFA platforms to use digital financial assets… https://t.co/0Lv0b3blCX pic.twitter.com/gnGNUM05vz
— Chad Steingraber (@ChadSteingraber) May 3, 2024
These developments heightened fears that the digital rial could enable sanctions evasion when combined with efforts from Russia.
