
Iran to Launch State-Backed Cryptocurrency to Counter SWIFT and US Regulations - riya_876
https://www.btcwires.com/c-buzz/iran-to-launch-state-backed-cryptocurrency-to-counter-swift-and-us-regulations/
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amiraliakbari
This article seems to be just speculations without any reliable source. Using
cryptocurrencies for any meaningful amount of money is impractical for
sanctioned countries because of difficulties in exchange with fiat currencies.
Currently the Iran government forces very restrictive policies on
cryptocurrency use by people. Even if there is a CBDC project under
development, a small project done as an experiment does not show what a
country is trying to do.

(I am CTO of a local cryptocurrency exchange market in Iran)

~~~
rdl
I can think of ways for them to essentially use crypto as a negotiable bond
(high rates due to uncertainty about politics and stability, although Iran
itself is a good long-term growth bet in ways other than politics). Issue the
CBDC in a way which essentially promises appreciation, do cross-chain atomic
swaps for other currencies for overseas purchasing.

Might not be more efficient than, say, shipping tankers full of oil to
countries who don't do the sanctions, or other goods, but it's an option. I
think if there were essentially a way to anonymously buy 30% interest rate
Iranian bonds at a retail level for crypto, you'd see people do it. They could
also go after the stablecoin market by earmarking oil/other
commodities/physical USD/etc. as backing.

~~~
runeks
Iran can easily issue BTC- or ETH-denominated bonds.

Why would a free market buy bonds denominated in some newly created currency?
Smells like the issuer just wants to be able to devalue this currency in order
to pay the interest.

In the end, the reason reasonable investors won't buy 30% BTC-denominated
Iranian govt. bonds is that Iran will have to exchange the ETH/BTC earned from
selling the bond (because whoever Iran wants to pay don't accept ETH/BTC),
which exposes the investment to a huge exchange rate risk.

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devereaux
I find it funny how some countries want to use crypto to avoid some
regulations they don't like.

However they are not using existing cryptos: instead they try to bootstrap
their own crypto to still milk the seignorage cow they like, and to keep the
ability to rewrite the rules later that they also like.

My trust in these countries monetary policy is less than the trust I have in
say Grin.

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HashThis
If Iran was serious, then they would use Ethereum or Bitcoin. They would make
an exchange in their country to get local currency in/out Ethereum. The
exchange could allow local banks to transfer in/out (ACH-like) to the exchange
to get in/out between Ethereum and their local currency. Then all cross-border
controls are gone by Ethereum senders and receivers crossing borders.

The only reason not to is:

1) They don't want local currency holders expropriating their capital

2) It could result in their local currency having high inflation or even
possible collapse down the road

But... if cross-border flow was really their goal, then they would use
Ethereum.

~~~
mihaifm
The only problem with this aproach is that the local exchange needs to do an
initial purchase of Ethereum from foreign markets, which is a traceable
transaction.

Once they’ve traced the original ETH all transactions flowing out of it can be
blocked by the other exchanges.

Their options are to either use a privacy coin (Monero) or make the initial
purchase underground and somehow hope it doesn’t get discovered.

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toss1
Sound great, but it's an insanely steep wall to climb.

* Their main goal, and problem, is to exchange to & from other currencies. They'll be subject to their coin being a poison pill that causes any bank or exchange dealing with it to be sanctioned, risking their own access to SWIFT, etc. How will they attract miners when miners will face the same exchange difficulties?

* Trust will be minimal, since it not only starts out as just another sh _tcoin among thousands, but unless they are VERY transparent and do no pre-mining or take other excess rights /value available to coin-makers, who else would trust it? E.g., that Venezuelan coin, supposedly backed by oil barrels, has it done anything good?

_ Even if they do get people to trust it, and get ways to exchange it, they'll
certainly be target of state-level cyber-attacks if the currency gains any
traction, and either a massive corrupting hack or a 51% attack could be even
more devastating than having never started in the first place.

I'm buying popcorn.

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chvid
What are these things exactly (this and Venezuela's "petro")?

Tokens on the eth blockchain? Something else?

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chabes
I’m pretty sure the Petro was just a centralized database that the Maduro
administration controlled and called a blockchain. Not too dissimilar from
their government..

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rdl
If there are zero trust atomic swaps to some more broadly used currency, and
this one has privacy-protecting features, it would actually have a chance.

~~~
zozbot123
Sorry, but this is an absolute non-starter, it has _zero_ chance. Nobody
trusts Iran on anything "atomic" anymore, and even zero-trust isn't enough -
we've been deep in negative territory for quite some time. This is just too
radioactive.

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A4ET8a8uTh0
I am a sanctions guy at a local financial institution. I only speak for
myself.

I read through this and lack of any detail is telling ( not unlike with EU SPV
and Venezuela's own crypto attempt ). Personally, I think that crypto will
face the same fate as potcoin, but even when we assume it works, it will work
well locally.

If there is one thing we learned by now, it is that the whole point of
sanctions like these is to limit sanctioned country's access to the
international markets. Few exchanges will touch it and if they do, they will
likely be sanctioned.

So there is that, useful article to add to my linkedin feed.. but that is it..

edit: added missing 'they'

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gcb0
if you're an authority on the matter and consider the news pure noise, why
share it anywhere?

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jdfiugikdf823
Identifying noise is a valuable service for interested parties.

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wonderwonder
For a sanctioned country to create its own crypto currency makes little sense.
The west will just ban any use of that currency and they will be in the same
boat as before except now they will have a bunch of useless digital tokens. If
they want to be able to move money and the potential to purchase goods and
services with it, they should use an existing, established crypto.

Using something such as Monero/Zcash (pick your flavor of the month) makes far
more sense as there is already a widespread supply allowing them to optimally
'wash' their funds. They will likely not be able to convert their crypto
currencies into dollars and use those dollars in any meaningful way but they
could use the crypto currency to purchase needed goods and services and allow
the vendors to worry about fiat conversion.

Creating an Iranian cryptocurrency for use anywhere outside of Iran is doa. I
don't really understand the point of using it inside Iran either as they have
fiat for that.

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dragonwriter
> For a sanctioned country to create its own crypto currency makes little
> sense. The west will just ban any use of that currency

Crypto advocates often make a big deal out of the idea that states cannot in
practice effectively prevent or regulate use of crypto currency.

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Red_Pill_Phil
This. You can't prevent the use of crypto because you can't attack any single
point of failure.

~~~
wonderwonder
I see the scenario playing out like this. Majority of nations declare the new
Iranian crypto illegal, thus anyone mining it is guilty of sanction
violations. They then crack down on all people mining it. They should be able
to locate the majority of those computers relatively quickly. Most countries
would quickly follow suit as they don't want the US to accuse them of sanction
violations. Then the only people mining and maintaining the block chain reside
in Iran. The new crypto currency is effectively dead at that point.

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mihaifm
Honestly, Iranian banks have a better chance of wiring money abroad if they
use Monero, but obviously it's not a solution the government will accept,
because well, no control.

If they decide to fork any existing cryptocurrency or create some kind of
token, it's likely to be banned on exchanges. I don't see how they could pull
this off.

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acdha
The big problem for any existing system is volume: Iran has enough money that
they’d dominate the real currency exchanges and once that happens the risks go
up for everyone involved. Even the most ideologically committed cryptocurrency
proponents are going to think twice about going to jail on behalf of a foreign
power without compensation.

~~~
gammateam
A measured approach would allow for this growth in a way that doesn't spook
the non-sanctioned markets.

Monero used to traded for around 45 cents ($0.45) for about 2 years, it trades
for $45 right now, your argument would have worked A LOT better then. Why is
Monero $45 right now? For the obligatory devil's advocate response who will
you blame: dark net markets, sanctioned countries, better user experience? All
we have are correlations and these networks are working as intended, and have
gotten a lot more hardened and resilient. So let it trade for $4,500 just
because Iran has some money to move.

~~~
acdha
The question is how much real money is entering or leaving the system, since
that's what would matter here — if someone is trying to launder $1B it's
probably going to be a big problem if the system is only exchanging $1M/day
into stable currencies and the rest of the volume is speculation. Similarly,
since there isn’t much base demand there simply might not be a sufficient
volume of buyers on the other side of those transactions.

Then you get to the bigger problem: being involved in these activities has
significant risks in any country which follows the sanctions. The authorities
are going to want you to prove that you aren't involved in the illegal
activity if you don't want to be charged with money laundering.

~~~
gammateam
> The authorities are going to want you to prove that you aren't involved in
> the illegal activity if you don't want to be charged with money laundering.

The onus is on the government to determine an illicit origin for their charge
of money laundering to stick. This is related to the US federal crime of Money
Laundering, and not any other variation.

In the Monero system, receivers do not know the address of the sender. So,
that's convenient.

~~~
acdha
US requires currency exchanges to make a strong identification for the
customer in every transaction. Using Monero does not remove that requirement
any more than using a suitcase of cash which just happened to show up in your
office would.

That alone would be a federal crime and it almost certainly would be enough to
get search warrants, etc. which would likely turn up evidence for other
charges for anyone who is running an exchange while badly misinformed about
the law. Anyone trying to be legit is going to steer clear of those
hypothetical Iranian transactions, especially since the odds of being
compromised in some other way are high even in the unlikely case that Monero
can withstand a nation-state level adversary. For any significant volume –
such as what we’re talking about – traffic analysis is going to get a lot of
info and since it involves Iran you’d be betting that none of numerous highly-
capable intelligence agencies have compromised another party who has a trace
pointing at you.

~~~
gammateam
Yes but this would be a DIFFERENT crime which I made it extremely clear we
aren't talking about

Nation states aside, the point you seem to be missing is that many people
people are able to acquire goods and services directly with Monero without
using an exchange. Merchants are not subject to the regulations that national
currency exchanges are subject to and there is no framework to create this
kind of prohibition right now.

~~~
acdha
> Nation states aside, the point you seem to be missing is that many people
> people are able to acquire goods and services directly with Monero

Which is true for sufficiently small definitions of “many” but not what this
thread was about. If you’re going to handwave about how being charged under
financial reporting rules designed to prevent money laundering is a completely
different crime then you have to acknowledge that there are reasons why a
system which is adequate for a few people making occasional purchases will
have big problems scaling up to the level of a nation laundering money to get
around sanctions.

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xiphias2
Link to original article:

[https://www.aljazeera.com/news/2019/01/iran-inches-closer-
un...](https://www.aljazeera.com/news/2019/01/iran-inches-closer-unveiling-
state-backed-cryptocurrency-190127060320571.html)

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tyingq
The US response should be interesting. Not sure how they could/would
technically enforce sanctions.

Edit: Yes, I understand the banking tie in. I was thinking more of mining, and
trading other cryptocurrency (monero maybe) for "bit-rials".

~~~
acdha
They’ll use the same techniques they are now: monitoring and blocking cash
flows, getting partners not to use it, etc. This is the same way that drug
dealers get caught even if they try using a variety of currencies,
collectibles, real estate, etc. — at some point you need real currency to
spend and the in/out-flows are monitored.

All a cryptocurrency adds is a public record making that task easier and the
hokum used to sell it may make the NSA’s job easier if people believe it’s
anonymous. Setting up a separate one also means there’s less benign traffic to
hide behind.

~~~
pepesza
Not all cryptocurrencies add public record. Examples: ZCash, Grin.

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nradov
The Iranian government routinely makes grand announcements about new
technology developments, but seldom actually gets much deployed. This is
probably more of the same propaganda.

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bitxbitxbitcoin
Despite what the US government might think, the fact that such an article
exists (reliably sourced or not) is absolutely a validation of the technology
behind cryptocurrency.

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aboutruby
Seems like going with an existing established crypto currency would would make
converting into any other currency much easier and much more difficult to
regulate.

