Iran to Launch Its Own CBDC ‘Crypto-Rial’
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On Monday, the Central Bank of Iran (CBI) announced that it notified domestic banks and credit institutions about a series of regulations related to Iran’s ‘crypto-rial,’ its forthcoming central bank digital currency (CBDC).
According to way2pay.ir, the rules describe how the digital currency is minted and distributed. Crypto-rials will be minted, and their maximum supply will be decided solely by the CBI.
Also, according to the website, a distributed ledger system, which comprises authorized financial institutions and can implement smart contracts, is supposed to be used to issue the digital currency.
In earlier statements, the crypto-rial was to become the nation’s new currency, just like banknotes and coins, but it would be completely digital.
From what is known about the CBI’s crypto initiative, the digital currency is not designed to compete with global cryptocurrencies
Cryptocurrencies
By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.
By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities.
Read this Term. It is the central bank’s responsibility to authorize the members of the system and to assess the impact of the new currency on the economy on a regular basis. There is no mention of wallets or transaction fees in the rulebook.
The move seeks to improve financial inclusion and give the CBI a competitive advantage against other global stable coins. As part of the local banking automation and payment services network, the Informatics Services Corporation (ISC) was tasked in 2018 with developing a national cryptocurrency. The CBI first announced its CBDC project in January.
CBDC in Jamaica
Early this year, the Bank of Jamaica (BOJ) announced the successful completion of its CBDC pilot. In March 2021, the BOJ announced the testing of a prototype CBDC in its financial regulatory sandbox
Sandbox
A sandbox is a commonly deployed term in the fintech universe, referring to a mechanism for developing regulation that keeps up with the fast pace of innovation.In scope of the computer science world, a sandbox is also associated with a closed testing environment that designed for experimenting safely with web or software projects.Sandboxes are very important to the regulatory field, though is also utilized within the digital economy space.The first regulatory sandbox was launched in the United Kingdom in 2015 and generated great interest from regulators and innovators around the world. For example, these constructs are useful testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.How are Sandboxes Used?In terms of fintech, the collision between new technology expanding boundaries and the regulation needed to police it is an important interaction that has evolved over time.In the fintech space, there is a growing need to develop regulatory frameworks for emerging business models in particular.Overall, the purpose of the sandbox is to adapt compliance with strict financial regulations to the growth and pace of the most innovative companies.Crucially, this needs to happen in a way that doesn’t smother the fintech sector with rules, but also doesn’t diminish consumer protection. A regulatory sandbox should aim to bring down the cost of innovation down, while also reducing the barriers to entry, and allowing regulators to collect important insights before deciding if further regulatory action is necessary.A successful test may result in several outcomes, including full-fledged or tailored authorization of the innovation, changes in regulation, or a cease-and- desist order.
A sandbox is a commonly deployed term in the fintech universe, referring to a mechanism for developing regulation that keeps up with the fast pace of innovation.In scope of the computer science world, a sandbox is also associated with a closed testing environment that designed for experimenting safely with web or software projects.Sandboxes are very important to the regulatory field, though is also utilized within the digital economy space.The first regulatory sandbox was launched in the United Kingdom in 2015 and generated great interest from regulators and innovators around the world. For example, these constructs are useful testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.How are Sandboxes Used?In terms of fintech, the collision between new technology expanding boundaries and the regulation needed to police it is an important interaction that has evolved over time.In the fintech space, there is a growing need to develop regulatory frameworks for emerging business models in particular.Overall, the purpose of the sandbox is to adapt compliance with strict financial regulations to the growth and pace of the most innovative companies.Crucially, this needs to happen in a way that doesn’t smother the fintech sector with rules, but also doesn’t diminish consumer protection. A regulatory sandbox should aim to bring down the cost of innovation down, while also reducing the barriers to entry, and allowing regulators to collect important insights before deciding if further regulatory action is necessary.A successful test may result in several outcomes, including full-fledged or tailored authorization of the innovation, changes in regulation, or a cease-and- desist order.
Read this Term.
While other central banks around the world are still preparing for a CBDC pilot, the recent initiative shows that the Bank of Jamaica is on track to achieve its CBDC roll-out target of Q1 of 2022.
On Monday, the Central Bank of Iran (CBI) announced that it notified domestic banks and credit institutions about a series of regulations related to Iran’s ‘crypto-rial,’ its forthcoming central bank digital currency (CBDC).
According to way2pay.ir, the rules describe how the digital currency is minted and distributed. Crypto-rials will be minted, and their maximum supply will be decided solely by the CBI.
Also, according to the website, a distributed ledger system, which comprises authorized financial institutions and can implement smart contracts, is supposed to be used to issue the digital currency.
In earlier statements, the crypto-rial was to become the nation’s new currency, just like banknotes and coins, but it would be completely digital.
The move seeks to improve financial inclusion and give the CBI a competitive advantage against other global stable coins. As part of the local banking automation and payment services network, the Informatics Services Corporation (ISC) was tasked in 2018 with developing a national cryptocurrency. The CBI first announced its CBDC project in January.
CBDC in Jamaica
Early this year, the Bank of Jamaica (BOJ) announced the successful completion of its CBDC pilot. In March 2021, the BOJ announced the testing of a prototype CBDC in its financial regulatory sandbox
Sandbox
A sandbox is a commonly deployed term in the fintech universe, referring to a mechanism for developing regulation that keeps up with the fast pace of innovation.In scope of the computer science world, a sandbox is also associated with a closed testing environment that designed for experimenting safely with web or software projects.Sandboxes are very important to the regulatory field, though is also utilized within the digital economy space.The first regulatory sandbox was launched in the United Kingdom in 2015 and generated great interest from regulators and innovators around the world. For example, these constructs are useful testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.How are Sandboxes Used?In terms of fintech, the collision between new technology expanding boundaries and the regulation needed to police it is an important interaction that has evolved over time.In the fintech space, there is a growing need to develop regulatory frameworks for emerging business models in particular.Overall, the purpose of the sandbox is to adapt compliance with strict financial regulations to the growth and pace of the most innovative companies.Crucially, this needs to happen in a way that doesn’t smother the fintech sector with rules, but also doesn’t diminish consumer protection. A regulatory sandbox should aim to bring down the cost of innovation down, while also reducing the barriers to entry, and allowing regulators to collect important insights before deciding if further regulatory action is necessary.A successful test may result in several outcomes, including full-fledged or tailored authorization of the innovation, changes in regulation, or a cease-and- desist order.
A sandbox is a commonly deployed term in the fintech universe, referring to a mechanism for developing regulation that keeps up with the fast pace of innovation.In scope of the computer science world, a sandbox is also associated with a closed testing environment that designed for experimenting safely with web or software projects.Sandboxes are very important to the regulatory field, though is also utilized within the digital economy space.The first regulatory sandbox was launched in the United Kingdom in 2015 and generated great interest from regulators and innovators around the world. For example, these constructs are useful testing grounds for new business models that are not protected by current regulation, or supervised by regulatory institutions.How are Sandboxes Used?In terms of fintech, the collision between new technology expanding boundaries and the regulation needed to police it is an important interaction that has evolved over time.In the fintech space, there is a growing need to develop regulatory frameworks for emerging business models in particular.Overall, the purpose of the sandbox is to adapt compliance with strict financial regulations to the growth and pace of the most innovative companies.Crucially, this needs to happen in a way that doesn’t smother the fintech sector with rules, but also doesn’t diminish consumer protection. A regulatory sandbox should aim to bring down the cost of innovation down, while also reducing the barriers to entry, and allowing regulators to collect important insights before deciding if further regulatory action is necessary.A successful test may result in several outcomes, including full-fledged or tailored authorization of the innovation, changes in regulation, or a cease-and- desist order.
Read this Term.
While other central banks around the world are still preparing for a CBDC pilot, the recent initiative shows that the Bank of Jamaica is on track to achieve its CBDC roll-out target of Q1 of 2022.
Cryptocurrency
