The crisis surrounding Iran's rial is intensifying amid economic hardships and political sanctions. The ban on rial transactions on cryptocurrency exchanges raises questions about the role of cryptocurrency in these issues.
Roots of Iran's Currency Crisis and Crypto's Role
Iran's rial has been losing its value for several decades. Throughout this time, the currency has been undermined by factors such as political isolation, sanctions, and poor economic management. A major driver of the crisis has been international sanctions, particularly those imposed by the United States, cutting Iran off from the global financial system. Internally, excessive money printing to cover budget deficits has also fueled inflation.
Crypto is Not the Primary Cause of the Crisis
Despite the surge in cryptocurrency activity, its economic role in Iran remains minimal compared to the broader system. Even when outflows reached $4.18 billion in 2024, this represented less than 1% of Iran's economy. Moreover, the government itself is using cryptocurrencies, supporting legal mining operations and integration into international trade.
Crypto as a Potential Solution
Cryptocurrencies, especially stablecoins, might provide a reliable means in the face of inflation and economic crises. The government should implement a balanced regulatory policy to maximize the benefits of cryptocurrencies for citizens, which could help stabilize the economy. Proper regulation and support for crypto infrastructure could attract investment and stabilize the financial system in the long term.
The divided opinions on the role of cryptocurrency in Iran's rial crisis reflect deeper economic and political issues. Cryptocurrency is becoming not so much a threat as an opportunity for both the population and the state.
