Iran is considering bitcoin adoption as a way to boost revenue from tourism as crippling economic sanctions bite hard.
Tourism is a key aspect of the Iranian economy which generates substantial income for the country. This income is threatened by the renewed economic sanctions initiated by the United States. To prevent a collapse of the sector, the government is reportedly looking at several options including bitcoin adoption.
According to Al-Monitor, the Iranian government which is also working on a national cryptocurrency could encourage tourists to pay using bitcoin and other cryptocurrencies. It is also considering a national digital currency for tourism in the country
Iran Suffers From Economic Sanctions
As Smartereum reported last year, the United States government led by Donald Trump decided to resume economic sanctions on Iran. Following the renewed sanctions, the citizens scrambled to increase their bitcoin holdings. The government kept working on its national cryptocurrency project.
Economic Sanctions Threaten Tourism Revenues
Several months into the renewed sanctions, the country’s fiat currency has become highly devalued. The Iranian rial lost as much as 60% of its value since last year and this is affecting its income from tourism. According to Al-Monitor, the number of tourists from Europe has decreased while the number from neighboring countries went up.
Bitcoin Adoption to Boost Tourism Revenue in Iran
Cryptocurrencies like bitcoin are seen as a means of evading mainstream sanctions. This is because they are unregulated and can be used universally. Bitcoin, for instance, can be used by any tourist going to Iran without and foreign exchange hassles. However, for this to be possible, merchants in the country must be open to accepting bitcoin and other cryptocurrencies. The government must also allow these transactions to be legal in the country.
According to Al-Monitor, both the government and the private sector are seriously considering cryptocurrency payment options. On the part of the government, the Iranian Cultural Heritage, Handicrafts and Tourism Organization (CHTO) is seeking solutions.
Digital Currency for Tourism in Iran
Per the report, the CHTO head Ali Asghar Mounesan proposed forming a joint digital currency fund with India to develop tourism ties after it began efforts cryptocurrency efforts in February. Last July, however, a proposal from Iran Electronic Tourism Association to establish a state-run digital currency for the tourism sector was approved by Mounesan and forwarded to the executive committee for review. Though results of the proposal have not been made public, the national digital currency known as the crypto rial is expected to be launch any time.
How Bitcoin Adoption is Helping Iran
Experts who spoke to AI-monitor said that established cryptocurrencies like Bitcoin will help Iran more than a crypto-rial. Ziya Sadr, a senior executive at bitcoin-friendly local travel agency IranByBit advised against the national crypto.
“A state-run crypto doesn’t have the potential to address any of the problems of accessibility, acceptability, and reliability of the local currency in tourism,” he said.
“On the other hand, a widely accepted and accessible cryptocurrency such as Bitcoin could help small businesses in the tourism sector to allow a wide range of customers from anywhere in the world to use their coins inside Iran.”
Iran generated $3.3 billion and $3.5 billion in 2015 and 2016 respectively before the new sanctions. If bitcoin adoption becomes widespread in the country, its tourism sector could survive the sanctions. The country reportedly had talks with 8 countries on how to use cryptocurrency in international trade.
Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.