The Daily: Iran Said to Announce Crypto-Rial This Week, Italy Closer to Crypto Regulation
January 28th, 2019
In this edition of The Daily, Iran is reportedly preparing to announce its national cryptocurrency during a conference starting on Jan. 29. Also, a draft decree introducing legal definitions for terms related to cryptocurrencies has been introduced in the Italian Senate and the IMF has voiced concerns over Malta’s blockchain industry while recognizing the positive growth prospects for the island nation.
Report: Iran to Unveil Sovereign Coin Within Days
Iran is expected to present its state-issued cryptocurrency at the end of this month. The digital coin, meant to help the Islamic Republic circumvent U.S. sanctions, is likely to be announced during the annual Electronic Banking and Payment Systems conference which begins this Tuesday, Jan. 29, in the capital Tehran, Al Jazeera reported. This year’s two-day forum will be held under the slogan “Blockchain Revolution.”
Iranian authorities stepped up the plan to develop a sovereign cryptocurrency after President Trump’s administration pulled out of the nuclear deal and reimposed sanctions last summer. In November, the country’s central bank was cut off from the international banking network Swift. Additional measures to restrict its access to the U.S. currency were introduced. Shortly after, major crypto exchanges stopped offering services to Iranian residents.
According to the report, the new Iranian cryptocurrency will be rolled out in phases. Initially, a digital token backed by the national fiat, the Iranian rial, will be issued to facilitate payments between Iranian banks and other institutions active in the crypto space. There is also a possibility to introduce the crypto-rial as a payment instrument for the Iranian public at a later stage.
Iran is believed to be working on its own version of a cross-border payment system that can be used in transactions with other countries excluded from Swift. During a crypto event in Yerevan in November, the Islamic Republic signed a blockchain cooperation agreement with Russia and Armenia. At the time, the president of the Russian crypto association Yuri Pripachkin commented: “According to our information, active development of an Iranian version of Swift is currently underway.”
Italy Moves Closer to Adopting Crypto Regulations
Several members of the Italian Senate have proposed a draft piece of legislation which has been described as Rome’s first attempt to legally regulate certain aspects of the industry built around cryptocurrencies. The Decreto Semplificazioni has already passed two parliamentary committees – of Constitutional Affairs and of Public Works – and now has to be approved by the Senate and the Chamber of Deputies.
The document introduces legal definitions for terms associated with the crypto sector such as “smart contract” and “distributed ledger technology,” Italian media reported. According to the decree, the country’s Agenzia per l’Italia Digitale must create specific technical standards these technologies will be expected to meet. The standards should be adopted within three months following the enactment of the amendments.
The legislative proposal comes after last month the Italian Ministry of Economic Development published a list of 30 experts tasked to develop a comprehensive regulatory strategy regarding digital assets and blockchain technologies. In September, the ministry said that understanding these innovations is a “fundamental priority” for Italy.
IMF Worried About Malta’s Crypto Industry
In the past year, Malta has become a leading crypto-friendly jurisdiction in Europe, attracting some well-known companies in the sector such as Binance, Okex, ZB.com, and Bitbay. Many other businesses have either opened offices or have announced plans to establish a presence there. The Maltese government adopted three bills designed to regulate cryptocurrencies and related technologies in the ‘Blockchain Island.’
But according to the International Monetary Fund, the growth of the industry has created “significant risks.” The IMF is worried that Malta’s financial system can be used for money laundering and terrorism financing, the Times of Malta reported quoting conclusions drawn by an IMF mission. In its preliminary findings, the mission has highlighted the blockchain sector, together with the financial and gaming industries, as posing threats to anti-money-laundering (AML) efforts. The strong demand for Malta’s citizenship-by-investment scheme has been also included in the list. All these have been a major source of income for the small European island nation.
The IMF mission urged authorities in Valletta to ensure that companies providing services related to digital assets fulfill AML requirements. The fund’s representatives were also worried about the effectiveness of the financial supervision efforts which they claim are constrained by insufficient regulatory capacity and deficiencies in the regulatory framework. Despite all these concerns, however, the mission admitted that the growth prospects for Malta remain favorable.