As economic sanctions start to bite, Iran is now looking to cryptocurrencies to ease the damage. The world’s third-largest oil-producer seeks to follow in the footsteps of Venezuela, which has issued an oil-backed digital currency called the Petro. But can Iran succeed where Venezuela is ostensibly faltering?

Also read: As Zimbabweans Struggle for Cash, Even the Country’s Only Bitcoin ATM Has Run Dry

Iran has agreed to officially recognize the mining of cryptocurrencies as an industry and the Central Bank of Iran, which oversees foreign exchange and monetary policy, will draft a policy framework for the industry in the next 18 days.

The Secretary of Iran’s Supreme Council of Cyberspace, Abolhassan Firouzabadi, told IBENA – a specialized news agency in banking and economy which is affiliated to the Central Bank of Iran – that deepening the use of cryptocurrencies is envisaged to smoothen trade between Tehran and its partners, especially in the wake of renewed US sanctions.

According to IBENA, Firouzabadi stressed that mining of cryptocurrencies like bitcoin had “been accepted as an industry in the government and all related organisations..” These include the government’s Ministry of Communications and Information Technology, Central Bank, Ministry of Industry, Mining and Trade, Ministry of Energy, as well and Ministry of Economic Affairs and Finance.

“But the final policy for legislating it (crypto mining) hasn’t been declared yet,” said IBENA.

Washington, which recently decided to walk away from the nuclear deal that was signed by the Obama administration, imposed new sanctions that are designed to cut oil sales from Iran, the economy’s lifeblood.

Iran is the world’s third-largest oil producer within OPEC after Saudi Arabia and Iraq. However, the Middle East country hopes to leverage on cryptocurrencies to compensate for the expected squeeze in petrodollars.

Iran will not be the first country to try and use cryptocurrencies to deflate the effect of economic sanctions. Venezuela in February issued a digital currency of its own called the petro, which is claimed to be backed by oil. But the petro appears to have run into trouble. Recent media reports suggest that the currency has found no takers, and the oil that was meant to back it up on a one to one basis with each barrel just isn’t there. The US has responded by banning its citizens from investing in the petro.

Do you think Iran will succeed in its plans? Let us know what you think in the comments section below.

Images courtesy of Shutterstock.

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