Iran could pave the way for the adoption of Bitcoin as a foreign reserve currency. The reports of Iran moving away from US dollar as the preferred reserve currency in retaliation to the travel ban issued by Trump administration has led to this speculation.
Until recently, Iran has been under sanctions for its nuclear program. With the sanctions relaxed last year, there were signs of trade and diplomatic relations between Iran and the United States returning to normalcy. However, the recent executive decision banning the entry of people from seven Islamic countries into the United States has again flared up tensions between both the countries.
Earlier, on many occasions, Iran had pushed for the use of currencies other than the US dollar for international trade. But given the strong position of the US dollar as the reserve currency across the world, the initiative was moderately successful. However, recent developments under the new presidency have encouraged the Persian nation to pursue the use of alternative currencies.
Bitcoin has already gained acceptance among people across the world as an alternative to fiat. The decentralized nature of Bitcoin, it’s ease of use and faster cross-border fund transfer capabilities of the digital currency makes it a logical choice for use in international trade. However, it is highly unlikely for countries to adopt a currency that is not issued by any central bank.
There have been calls for the Iranian banking and financial sector to explore the use of Bitcoin and its underlying technology. Recently, the chief executive of Tejarat Bank in Iran called for the country’s banking and payment service providers to prepare themselves to embrace new technologies which could help the country’s financial sector. Few news outlets have quoted Ganesh Jung, the CEO of Draglet — the creator of Bitcoin exchange platform currently used by Iranian BTXCapital saying,
“The market is massive. A large population with a high proportion connected to the internet means there is a lot of completely untapped market potential.”
He also added that Iran would be supportive of Bitcoin to signal that the country is hoping to reintegrate with the West.
At present, there are no rules that specifically prevent the use of Bitcoin in the country. But an official endorsement of the cryptocurrency by adopting Bitcoin as a foreign reserve currency is still far-fetched. If it happens, then the adoption of Bitcoin will further increase, strengthening its value across markets.