On Tuesday, May 9th President Trump announced that the US would withdraw from the Joint Comprehensive Plan of Action aka “Iran-US Nuclear Deal.” During a presidential press conference yesterday Trump stated the terms of the deal was “Defective at its core if we do nothing we know what will happen.” Following that the US would issue additional sanctions for any country that assist Iran in attaining materials that contribute to creating nuclear weapons. He continues to state,
“This was a horrible one-sided deal that should have never, ever been made.”
In light of these actions Iran also would not “do nothing” when it comes to having channels for commerce established outside of the globally used Central Banking System. Although this is coming to light now upon the issuing of US sanctions, putting cryptocurrency into a working infrastructure is not that new of a frontier for Iran. There have been active speculative traders making money that has been well documented by the Iranian Government for quick some time.
There is more than speculations about Iran developing cryptocurrency of their own as a central bank contingency, this has been confirmed and denied oddly enough. With a tweet from the Iranian Government dismissing the claims based on market volatility and questionable business activates within the space making this development too “unreliable and risky.” This seemed to be corroborated by banning of Cryptocurrency from the Central Bank of Iran (CBI) in April of this year issuing the following statement:
“All cryptocurrencies have the capacity to be turned into a means for money laundering and financing terrorism and in general can be turned into a means for transferring criminals’ money.”- Central Bank of Iran
These claims don’t seem to have any bearings for Iran domestically as Iran who announced last week that an experimental model has already been established. This is all interesting timing with the impending sanctions from Trump. With 2.5 billion exiting the country nearly immediately after the press conference this appears to be a contingency that was already premeditated in anticipation of the US’s rejection of the Agreement.
Iran has already thoroughly researched a working economic structure with bitcoin before 2018, the single greatest issue with implementing a digital currency as the sole national currency mainly rests on the volatility and inconsistency of the digital currency market. If the country was able to accept significant price fluctuations of the current market they potentially face the refusal of the acceptance of the digital currency by other nations for international transactions.
However in the case of sanctions, this would now contain the commerce to only within that nation, an old price standard could be set nationally, and price volatility would no longer be an issue. For example, if a car costs $20,000, then the value of the USD declines 20% from its current value to the Euro, and the vehicle remains $20,000. If the buyer is still making the same salary and paying the same amount in taxes and all of this continues regardless of the dollars global value, then price volatility would not directly affect on price consistency within a single nation’s internal economic transactions.
All of this might have already been considered by the Iranian Government, who as of this morning are now vested another extra 2.5 billion (about .5% of the total Digital Currency Market-Cap). It will be intriguing to see how these actions are addressed or if they are acknowledged at all in the international arena. Until then…any guess on which coin they bought?