In a new twist, Russia and Iran might soon use cryptos to turn the tables and bypass the financial sanctions imposed on them by the West. The countries have studied cryptocurrencies and their potential, and they see a way to reduce, or even completely eliminate, their dependence on the US dollar.
Iran and Russia enter a crypto pact
Iran has faced many financial difficulties recently due to its currency reaching record lows against the US dollar. The monetary crisis ultimately led to US’s withdrawal from the nuclear deal with this country that was made during President Obama’s time in the office.
The US has also imposed sanctions on Russia alongside the European Union after the Russian military’s intervention in Ukraine.
There might, however, be a way to bypass this situation, and reduce these countries’ dependence on both the US dollar and SWIFT’s global interbank system. According to Tehran, the solution might lie in digital currencies. Russia’s RBC reported that Tehran suggested this solution during discussions with Moscow.
The Iranian government has come to the same conclusion and their Central Bank already received requests from the country’s Parliamentary Commission of Economic Affairs to develop proposals regarding potential use of cryptos.
According to Mohammad Reza Pourebrahimi, cryptos represent a growth industry in recent years, have proven their potential for solving critical issues and might be the perfect way to go around the US dollar and SWIFT. He stated this after a meeting with the head of Federation Council Committee of Economic Policy of Russia, Dmitry Mezentsev.
The meeting was held in Moscow, and Pourebrahimi was able to confirm that it involved a crypto pact articulating how Russia and Iran will cooperate to resolve these issues.
He added that Russia shares Iran’s opinions and concerns, stating that these two countries might become the first ones to use cryptos in deals involving the exchange of goods.
The work continues on state cryptos
Iran’s interest in blockchain and cryptos is not new. Mohammad Azari-Jahromi, the country’s ICT Minister, confirmed back in February that the country is creating a state-based blockchain-powered crypto of its own. Even back then it was intimated that a pilot model was ready for review and potential approval. It was to be added to the country’s banking system, should the currency prove to be functional and useful.
These efforts were mirrored by Russia, on President Putin’s own orders, for a currency called CryptoRuble that could serve to bypass sanctions, according to Sergei Glazev, Putin’s economic advisor. He added that it would allow Russia to settle accounts with the country’s parties around the world, with no sanction-related issues.
There have been reports that Russia was linked to the creation of Petro, the first ever state currency, developed by Venezuela. Petro’s first official announcement came in December 2017, from the country’s president himself. President Maduro called it a financial instrument that would help the country bypass US sanctions. However, officials from the Kremlin have denied that the country, or its officials, including President Putin, had anything to do with the creation, development, or launch of Petro.