Turkey, Iran, Russia are all eyeing national cryptocurrencies
All of them have the threat of US sanctions in common with Venezuela.
US sanctions may be on the table for Turkey in 2018, and already are a fact of life for Iran, Russia and Venezuela. But they have something else in common, too. All four countries have made moves towards national cryptocurrencies.
- Venezuela launched its own oil backed cryptocurrency the Petro, and then followed it up with an announcement that it would be launching a second gold backed token.
- Iran's technology minister has proposed a blockchain based digital currency administered by the country's central bank.
- A politician from Turkey's nationalist party has proposed a national "Turkcoin" cryptocurrency.
- Russia has proposed a multinational BRICS cryptocurrency.
In purely practical terms it makes a world of sense, and would make sanctions even more difficult to enforce by allowing the direct transfer of money between two parties without involving the global banking network.
Typically sanctions are enforced in a variety of ways, including the application of legal pressure to global banks and potentially hefty fines for banks that improperly deal with, or prevent deals with, sanctioned countries.
For example, Deutsche Bank was previously fined the equivalent of a few hundred million dollars for breaching US sanctions in Iran and Syria, and other banks have been fined similar amounts for breaching sanctions on North Korea. The hefty fines mean working with sanctioned nations is typically an undesirably risky proposition for banks, but a national cryptocurrency would let actors in sanctioned nations make deals without involving the banks.
However, it's not clear what kind of value a national cryptocurrency would have outside the nation. Perhaps after implementation it might still end up making sense to use a more universally accepted cryptocurrency like bitcoin or Monero for all one's sanction-breaching needs.
It's worth noting that this is almost certainly already happening around the world, and has been in various forms for a while. North Korea reportedly ran "gold farms" where prisoners would be forced to play computer games to earn the game's digital money, which would then be redeemed for real money.
Even then, the digital money brought the same advantages as a cryptocurrency. It let North Korea move largely untraceable funds outside the existing banking network and set up a revenue stream that was almost impossible to crack down on.
Today it's graduated to cryptojacking and Monero mining. The regime has to spend it somewhere, and it's safe to assume that Monero hasn't become the de facto currency on the streets of Pyongyang, so it's almost certainly being spent and accepted internationally.
At this stage, it seems likely that black market dealers would consider Monero or bitcoin to be a lot more reliable, in both value and anonymity, than the Venezuelan Petro or any other national cryptocurrency.
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Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, NANO, SALT, BTC