Weeks after Iran lifted its ban on Bitcoin (BTC), digital currencies, and initial coin offerings (ICOs), it has announced the launch of PayMon — a national currency backed by national gold reserves.

The token will reportedly be developed by tech startup Ghoghnoos with the help of four other local banks. Iran’s strategy with the new cryptocurrency is to escape US sanctions in association with its other international partners.

It remains to be seen if Iran’s allies can handle mounting pressure from the US government.

Built on Stellar

In an interview with Russian news outlet Sputnik, blockchain specialist Hamid Reza Shaabani stated that the Iranian cryptocurrency has been built on top of the Stellar network and emphasizes the principles of security and reliability. The token will be used for transactions by individuals as well as financial enterprises. However, he declined to speculate how wide the cryptocurrency’s appeal would be — citing potential regulatory hurdles.

When asked about the supposed gold reserves, Shaabani said that Ghoghnoos has taken measures to increase transparency. He further explained that, while the plan is for token holders to be able to receive gold in exchange for PayMon, the exact details of the implementation have not been finalized.

Users will reportedly also have to complete Know Your Customer (KYC) compliance checks before being able to purchase the token. Ghoghnoos is also required to ensure that the cryptocurrency has sufficient measures to combat money laundering and terrorism funding.

Shaabani said that PayMon will enter the market through special exchange offices, which is where it will also be made available for trading. A small percentage of tokens has been set aside for the cryptocurrency’s development, while another section will go to Ghoghnoos’ founders.

Similarities to Petro

Iran is not the first country to experiment with a state-backed cryptocurrency.

Exactly one year ago, the Venezuelan government launched Petro, which was supposedly backed by raw materials such as oil, gas, gold, and diamonds. The primary purpose of the cryptocurrency was to circumvent sanctions imposed by the United States and the European Union. The government claimed that the token had raised as much as $735 million in its first day of the pre-sale.

Petro tokens were priced equivalent to a barrel of oil and were meant to be used as a payment method at merchants providing goods and services. While Venezuela intended for Petro to gain international significance, US President Donald Trump swiftly signed an executive order that barred the purchase of Petro.

Do you think PayMon will suffer the same fate as Petro? Are more state-issued cryptocurrencies on the horizon? Let us know your thoughts in the comments below!