A gold-backed cryptocurrency has been launched in the Islamic Republic of Iran,. The cryptocurrency known as Peyman (the Persian word for covenant) is the fruit of cooperation between four banks and Ghoghnoos Company.

The four partner banks are Parsian Bank, Bank Pasargad, Bank Melli Iran, and Bank Mellat. Iran Fara Bourse, an over-the-counter exchange, is also expected to host the new currency, Iranian English daily Financial Tribune reports.

Tokenization of Assets Belonging to Banks

According to a Ghoghnoos director, Valiollah Fatemi, Peyman will be used to tokenize banks’ assets and excess properties:

The token can function like a wallet and channel the excess assets into the economic cycle. We seek to extend the technology for accelerating the pace of bank transactions.

Ghoghnoos has indicated that initially one billion units of Peyman will be offered. In the near future, the cryptocurrency will be available for purchase on Irana Fara Bourse.

Peyman’s launch comes amidst speculation that Iran is planning to unveil a state-backed cryptocurrency, crypto-rial, in order to escape U.S. sanctions.

Similar to the recent #Petro offering conducted by the Venezuelan government, Iran is considering a state issued #crypto and may make an official announcement soon:https://t.co/oLS2qux9wu — Stellerro.com (@stellerro) January 29, 2019

The sanctions have crippled the ability of Iran and its citizens to conduct business with the rest of the world. This is because financial intermediaries such as SWIFT are prohibited from offering services to the country.

State-Backed Cryptocurrencies as an Alternative to SWIFT

Plans for a crypto-rial were telegraphed last year after Iran identified cryptocurrencies as a workaround for the sanctions.

Immediately after the second tranche of the sanctions went into effect in November last year, the governor of Iran’s central bank, Abdolnasser Hemmtai, announced that an alternative to SWIFT was already being worked on. A little over a week later Iran inked a blockchain cooperation deal with Armenia and Russia.

During the first phase of the state-backed cryptocurrency’s rollout, only institutions such as commercial banks will have access. It is only in the second phase that individuals will be able to use the cryptocurrency.

Iran does not envisage using the state-backed cryptocurrency to receive payments for exports or pay for imports initially. The move could, however, allow Iran to join an international payment system that is based on blockchain technology in the future.

Central Bank of Iran Issues Cryptocurrency Regulations

The launch of Peyman also comes less than a week since Iran’s central bank issued draft cryptocurrency regulations, per Aljazeera. While the regulations reversed a ban that had been imposed earlier they still imposed restrictions on cryptocurrency use. For instance, bitcoin still can’t be used as a means of payment. There are also limits on the number of cryptocurrencies that an individual can hold.

Besides allowing cryptocurrencies such as bitcoin, Iran’s central bank also permitted initial coin offerings. Cryptocurrency exchanges and bitcoin wallets were also given the green light as was cryptocurrency mining.