The Central Bank of Iran has launched a pre-test phase of the Crypto-Rial, the central bank digital currency, the governor said Wednesday.
“At this phase, Bank Melli Iran and Bank Mellat have started distributing restricted amounts of crypto-rial to some people…two shops have also started accepting the Crypto-Rial,” Ali Salehabadi was quoted as saying by the state-broadcaster, IRIB, on Wednesday.
The test phase should help the CBI identify issues in using the new currency. Salehabadi said the pilot phase is likely to be launched soon.
“Minting currency in the new form must be approved by the Money Reserve Supervisory Board. The board approved 10 billion rials of Crypto-Rial be minted for use in the pre-pilot phase.”
This is expected to increase by the time the pilot phase is ready for launch.
The bank has in place infrastructure and rules for the Crypto-Rial and the cryptocurrency is planned as a new type of national currency, like banknotes and coins, but fully digital, he said earlier.
Based on what is known about the CBI crypto agenda, the digital currency is not designed to compete with global cryptocurrencies. Unlike bitcoin and other cryptos, CBDCs or central bank digital currencies, are centralized, not anonymous and in accord with anti-money laundering requirements.
The agenda calls for improving financial inclusion and function as a powerful tool for the CBI to compete with other stable coins globally.
The digital currency is to be minted in a distributed ledger system, consisting of authorized financial institutions and capable of implementing smart contracts.
Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
Helping Imports
The senior banker elaborated on plans to use cryptocurrencies to pay for imports. "Authorized cryptominers can sell it via a special platform where importers can buy and use it for imports."
Earlier this month, the Trade Promotion Organization of Iran said importers would be able to use cryptocurrencies and $10 million in cryptocurrency was used recently for settling an import bill.
Mining virtual currency is legal in Iran and miners can operate under rules approved by the government in July 2019. Mining digital currency without a license from the Ministry of Industries is illegal.
Miners pay their electricity bills based on power export tariffs. In April the Energy Ministry revised regulations for cryptomining as per which 16,574 rials is charged for one kilowatt-hour. Tariffs are cut by half when household consumption is low and the grid is not under pressure, as happens in the summer season.
Rates double during restrictions like when power plants do not receive enough feedstock, face technical problems or undergo routine maintenance. Trade in crypto is still banned.
