The Central Bank of Iran (CBI) has introduced the national digital currency through a public pilot program aimed at domestic micropayments.
On June 18, the CBI officially announced the launch of a pilot scheme for Iran’s central bank digital currency (CBDC), known as the digital rial. The pilot will take place on Kish Island, a popular tourist destination located in the Persian Gulf, starting on June 21, the first day of the calendar month of Tir.
Kish Island, covering an area of 92 square kilometers, is the second largest island in the Persian Gulf and operates as a free trade zone. As a result, tourists from various countries are not required to obtain a visa to visit Kish, making it a significant tourist hub. In fact, Kish Island is the third most visited holiday destination in the Middle East, following Dubai and Sharm el-Sheikh.
In 2021, Muhammad Javad Azari, a former minister of information and communications in Iran, proposed transforming Kish Island into a hub for both domestic and international cryptocurrency exchanges.
The digital rial, according to Iran’s central bank, does not necessitate interbank settlement. The public launch of the digital rial on Kish Island will build upon the pilot program initiated in 2023. Bank customers and tourists will have the opportunity to utilize the digital rial for payments by scanning a barcode with specialized software, offering an alternative to cash or bank cards.
The CBI highlighted that the digital rial streamlines micropayments and contributes to the development of the digital economy within the country. The currency is designed exclusively for domestic use and simplifies payment processes without the need for interbank settlements.
Despite Iran’s mixed stance on cryptocurrencies like Bitcoin, with permission for purchases and sales but a ban on using crypto for payments, the government has been regulating the local cryptocurrency mining sector since 2018. Critics, such as United States Senators like Elizabeth Warren, have raised concerns about Iran’s cryptocurrency mining activities potentially circumventing U.S. sanctions.
Overall, Iran’s introduction of the digital rial on Kish Island signals a significant step towards modernizing the country’s payment infrastructure and facilitating domestic micropayments.