🌎 Iran Launches Digital Rial Pilot for Cashless Transactions

Iran’s central bank is set to launch a pilot for its digital rial, enabling cashless transactions for banking customers.

Launch of Digital Rial

The Central Bank of Iran (CBI), also known as Bank Markazi, has announced the operational phase of its digital currency, the digital rial, to modernize and simplify domestic transactions. According to a press release, the pilot is scheduled for July, allowing banking customers and tourists on Kish Island to make purchases and transfer funds using digital wallets and QR codes. The digital rial aims to enhance the resilience and efficiency of the region’s payment infrastructure, fostering new business models, particularly in e-commerce and the digital economy.

Testing Phase and Security

Iran’s central bank has been testing its digital currency since 2022 in a limited pilot phase that started in June 2023. CBI asserts that its state-controlled digital currency increases payment security and is simpler than traditional card payment methods.

Sanctions and Development

In February, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions against a network of entities accused of facilitating the illegal export of goods and technology from over two dozen U.S. companies to end-users in Iran. Among those sanctioned was the Iran-based Informatics Services Corporation (ISC), a subsidiary of the Central Bank of Iran responsible for developing the central bank digital currency platform (CBDC). OFAC stated that ISC was sanctioned for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of CBI.

ISC began working on the digital rial in 2018 using Hyperledger Fabric, a blockchain framework hosted by the Linux Foundation.

Future Implications

The digital rial’s launch is a significant move in Iran’s financial landscape. By enabling cashless transactions, it is expected to make payments more secure and efficient. As the pilot progresses, it will be interesting to see the broader implications on e-commerce and the digital economy within the region.