Category Archives: Central bank of Iran

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Iranian Students in UK Use Bitcoin to Bypass Sanctioned Banking

Iranian Students in UK Use Bitcoin to Bypass Sanctioned Banking

Iranian students studying at British universities are turning to Bitcoin to circumnavigate imposed sanctions on the SWIFT banking network.

In November, SWIFT suspended several Iranian banks from its service after the imposition of United States nuclear sanctions on Tehran. This has resulted in difficulties for Iranian students in the UK when obtaining cash. Many universities are now advising to return to Iran and return to the UK with sufficient cash funds to pay for courses and living expenses.

For many students, this is wholly impractical, involving crossing borders with large amounts of cash, notwithstanding the problems of personal security in doing so. There seems to be little option for students as universities payment systems can’t overcome the problem caused by the SWIFT sanction.

Consequently, some Iranian students have turned to Bitcoin, which was always intended to be a payment system obtaining their fiat funds through crypto exchanges. Maziar Bahari, editor of Iranwire, a news portal for Iranian citizen journalists based outside the country, suggests that students are now “…using Bitcoin and other cryptocurrencies in order to get money” after struggling to get banking services in the UK.

Its also rumored that the Islamic Republic of Iran itself may be circumventing the US-led economic sanctions in its own small way. The Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury, claims that “since 2013, Iran’s use of virtual currency includes at least USD 3.8 million worth of Bitcoin-denominated transactions per year”.

It now remains to be seen if Iran goes through with its plans for the imposition of a national cryptocurrency to bypass economic sanctions. The new Iranian state-backed cryptocurrency would be pegged 1:1 with the Iranian rial (IRR) and will initially be used by commercial banks in Iran once the Central Bank of Iran approves the cryptocurrency. Approval is likely, considering this cryptocurrency was developed by the Informatics Services Corporation at the request of the Central Bank of Iran.

International crypto exchanges, including Bittrex and Binance, have also begun complying with the sanctions against Iran and have stopped dealing with Iranian clients. This will make the travails of UK universities’ Iranian students even more complicated moving forward in the 2019 academic year.

 

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Iran Official Says Blockchain Could Improve Economy

Iran Official Says Blockchain Could Improve Economy

In a report yesterday by leading international daily Tehran Times in Iran, the head of management development department of the vice presidency for science and technology Alireza Daliri said that blockchain could improve the Iranian economy.

Daliri was quoted by the news outlet saying, “This is possible with empowering the infrastructure of the blockchain technology with the help of government and the private sector.” He further suggested that the Iranian business community should open up its borders to the development of the technology in-line with over “140 [other] countries” exploring the new venture.

In his explanation of what the blockchain is, he recognized it as a “chain of blocks” which is used to “record information” and shared among members in a “blockchain network”. He also said that the blockchain’s immutable capability stemmed from its “strong cryptography”.

Daliri said: “We should coordinate with other countries in the world in terms of new technologies and the blockchain is one of the issues.” His view of the blockchain was that it is one of the emerging technologies.

While he does recognize the concerns of other governments about the blockchain technology, he opines that the benefits far outweigh the “damages” and for this reason, he was on the side of partnership and working with other countries who are embracing the technology. He added that “the vice presidency [could] decide to use this technology in different fields in the near future”, noting its multiple areas of exploits, especially in the “decrease [of] bureaucratic procedures”.

Daliri further said that the vice presidency plays a role in facilitating the “activities of the private sector active in the field of blockchain technology”.

Blockchain may be receptive in Iran but cryptocurrency was smeared with negative impressions when the Central Bank of Iran (CBI) in April banned the country’s banks from dealing with cryptocurrencies, expressing concerns over money laundering. This ban, however, did not last long and the nation turned to regulate the industry.

Initial concerns took an interesting turn when CBI requested the Informatics Services Corporation to develop a national cryptocurrency backed by the state. This was done in preparation for the looming inflation that was about to hit the country due to US sanctions. Against the US condemnation of the move to avoid sanction, the Iranian government says it is still on schedule with the release of a national cryptocurrency.

 

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Islamic Business Group Calls for a Cryptocurrency for All Muslim Nations

With Iran’s cryptocurrency waiting for approval from the Central Bank of Iran (CBI) the International Business Forum (IBF) has called for a single cryptocurrency for all Muslim nations.

The concept has been kickstarted by Iran’s current move to alleviate its sanctions dilemma, attempting to combat what it sees as the dominance of the US dollar in world trade by launching its own national cryptocurrency.

The IBF, a Muslim-focused business lobby group, claims that the dollar is being used more of a sanctioning tool rather than a purposeful financial device. The Group’s chairman Erol Yarar is calling for changes to the status quo in international trade, commenting:

“In IBF this year we will discuss the term ‘monetary pluralism’ to create a fairer and healthier trade environment…We will make a cryptocurrency system, that will be used for international trade among Islamic countries, a current issue.”

This call for an Islamic cryptocurrency is only possible now that that recent discussions in the Muslim world have satisfied Islamic countries around the world that digital currency use in no way conflicts with Sharia Law. Matthew J. Martin of Blossom Finance, a fintech startup based in Indonesia clarifies the position:

“As a payment network, Bitcoin is halal. In fact, Bitcoin goes beyond what more conventional closed banking networks offer. Unlike conventional bank networks which use private ledgers where there’s no guarantee that the originator actually owns the underlying assets, Bitcoin guarantees with mathematical certainty that the originator of the transfer owns the underlying assets. Conventional banks operate using the principle of fractional reserve, which is prohibited in Islam.”

Yarar argues that an internationally recognized Islamic cryptocurrency for all Muslim countries around the globe is essential in order for the nations adopting it to “undermine and challenge America’s established hegemony in the global financial system”.

Iran has suggested that its new, as yet unnamed national cryptocurrency will bring “enlightenment” to their economy. When the currency is finally issued to banking institutions, plans for testing payments and internal and interbank transactions will be the first task for Iran’s banking sector before it goes live.

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Iran Validates Bitcoin Mining; Legislation and CBDC to Follow

The Iranian Cyberspace Council Secretary has declared that cryptocurrency mining has been accepted by the country’s major authorities.

Secretary Abolhassan Firoozabadi has said that mining now needs the backing of legislation which allows for the activity to become legalized. The Ministry of Information and Communications Technology, the Central Bank, the Ministry of Industry, Mine and Trade, the Ministry of Energy, as well as the Ministry of Economic Affairs and Finance have all given the go-ahead after consultation with the Iranian government.

The news is somewhat surprising given recent developments in the nation which has sent rather mixed messages regarding the government’s view on cryptocurrency to those promoting its adoption.

Iranians have sent more than USD 2.5 billion out of the country for the purchase of cryptocurrencies. The revelation was made by Mohammad Reza Pourebrahimi, Iran’s Chairman of the Economic Commission of the Parliament, moments after US president Trump announced America’s withdrawal from the Iran nuclear deal earlier this year.

Iranians are still using Bitcoin as a popular alternative to traditional currencies, despite anonymous reports coming in from Iran that the government has been stifling the trading of cryptocurrency since May 2018 by blocking important exchange websites. The Central Bank of Iran had previously declared that all Iranian financial institutions were prohibited from facilitating crypto trading or any other crypto activity.

The new move indicates that the government of Iran has a use for cryptocurrency in mind, by its proposed development of a mining platform, plus its continued discussions around a national cryptocurrency, albeit a move which appears to be aimed at establishing measures to circumvent possible trade sanctions from the US.

The proposed currency will be controlled by the country’s central bank which will control any token issue, which will be backed by the Iranian rial. “The infrastructure is supposed to be as an ecosystem available for Iranian banks,” said the Central Bank of Iran on its news wire last week.

With regards to startups, the secretary has suggested that a regulatory framework will be introduced by this September.

 

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