Iran is doing what every respectable state sponsor of terrorism does when their economy is going down the drain. They turn to bitcoin. Just like North Korea did (and still does). As bitcoin outpaces the Rial (Iran’s currency), the next wave of ransomware attacks will be coming soon, courtesy of Iranian hackers. And the payment will, of course, be in bitcoin. The irony of the Iranian government turning to ransomware attacks to obtain bitcoin isn’t lost on their citizens. Cryptocurrencies are banned from use by lenders. This after over 2.5 billion Rials fled the country, according to Mohammad Reza Pourebrahimi, chairman of Iran's economic commission. The government, however, isn’t above accepting bitcoin payments when they’re obtained through a criminal enterprise like ransomware attacks. ADVERTISEMENT The US government isn’t making it easy. Over 500 bitcoins, valued at just over $5.7 million at the time, were seized by federal officials according to Iran. And since cryptocurrencies are banned in Iran, the owners of the bitcoin don’t seem to have any legal recourse in Iran or the United States. Just to be safe, Iran is also stealing the processing power of computers so they can mine even more cryptocurrencies. It’s called cryptojacking, and the primary targets of these digital thefts have been in the Middle East. Iran’s main nemesis, Saudi Arabia, has been targeted and the loss of computing cycles has cost them millions of dollars. Another tactic Iran is developing to avoid the crippling sanctions is the creation of their own digital currency. Since these digital currencies are not under the control of US regulators, Iran would conceivably be able to send and receive money and avoid the restrictions that apply to traditional banks. Why would Iran go to all this trouble? To stay in power. A struggling economy and civil unrest threaten the stability of the current regime. According to a Fox News report, “Videos circulating on social media purportedly taken from inside Iran show thousands of protesters marching through the streets. In one video, crowds leaving a soccer match are heard yelling ‘Death to the dictator! Death to Khamenei! Death to Rouhani!’ and ‘Islamic regime must get lost!’ according to a translation tweeted by a Middle East analyst.” Not a good omen. But Iran is hoping to hold out long enough to start using their native digital currency. And if that happens, we’re looking at a new type of warfare. The US will no longer be able to use its financial power to make banks refuse to do business with Iran. Iran’s end-run will leave our government without one of its most effective weapons. In June 2010, news reports began appearing about the discovery of a computer worm targeting Iran’s uranium enrichment program and their centrifuges. Stuxnet had wreaked havoc and caused significant damage and delays. This code was so sophisticated it was called the first cyber weapon, and heralded the arrival of a new type of warfare. It might be time to think about how to cripple Iran’s emerging digital currency instead. Doing so would create a one-two punch. The sanctions are causing a financial meltdown internally, which is leading to growing unrest. The question is whether Iran can hold on long enough for its new crypto currency to make a significant impact. The trick is to have the patience to let the current sanctions wear the regime down. And then, just as the new currency is about to launch, the US should launch a similar Stuxnet attack and crush any hope of avoiding the impact of sanctions. Iran is hoping to take a page out of Venezuela’s playbook. The South American country is on the verge of economic collapse from United States and EU sanctions. Their official cryptocurrency, the Petro, is tied to the vast oil reserves of the country. The state-owned oil company Petroleos de Venezuela will begin using the digital token starting August 20. It remains to be seen how the markets will react. ICOindex.com, a site which tracks and rates ‘Initial Coin Offerings’ calls the Petro a ‘scam’. According to their rating, the same team behind the Petro was also behind the well-known Bolivar scam. Russia and Iran are also collaborating on how best to use cryptocurrencies to conduct trade and also avoid US sanctions. What they’re actually trying to avoid is the SWIFT (Society for Worldwide Interbank Financial Telecommunication) secure financial messaging service. This is what prevents other banks from doing business with Russia or Iran. Putin, not to be left out, has also ordered the development of the cryptoruble. It appears Russia and Iran fear the Dollar more than they fear our military might. Which signals a troubling change in tactics that we have been slow to respond to. Should Russian and Iran successfully launch state-sanctioned cryptocurrencies, the United States and our allies will have lost one of the most effective tools we have to hit back. The choices are few. The United States could set heavy-handed regulations on digital currencies, but that would only affect law-abiding owners. It would have little effect globally unless all the major countries agreed. That seems to be a bridge too far at this point. On the other hand, it might be time for us to take a page out of our own playbook and design a new cyber weapon. Instead of targeting centrifuges, we should consider targeting currencies. Iran clearly hasn’t gotten the message. Maybe “Transaction Declined” will get their attention. Morgan Wright is an expert on cybersecurity strategy, cyberterrorism, identity theft and privacy. He previously worked as a senior advisor in the U.S. State Department Antiterrorism Assistance Program and as senior law enforcement advisor for the 2012 Republican National Convention. Follow him on Twitter @morganwright_us.<doc-sep>The Secretary of Iran's Supreme Cyberspace Council revealed that various ministries of the country’s government have accepted crypto mining as an industry, local news agency IBENA reports September 4. According to the report, the Cyberspace Council’s secretary Abolhassan Firoozabadi stressed that the mining of cryptocurrencies such as Bitcoin (BTC) has been approved as an industry by major government authorities. However, official legislation forming a legal framework for the industry has yet to be introduced in the country. Firoozabadi said that crypto mining has been accepted as an industry by Iran’s major authorities, including the Ministry of Information and Communications Technology, the Central Bank, the Ministry of Industry, Mine and Trade, the Ministry of Energy, as well as the Ministry of Economic Affairs and Finance. Firoozabadi stated that the Iranian National Cyberspace Center is developing a platform for cryptocurrency mining regulation. He added that the government is also considering the launch of a national cryptocurrency in order to create a financial tool to cooperate with Iranian business partners amid economic pressure from U.S. sanctions. The secretary reportedly claimed that the relevant authorities will introduce a regulatory framework for crypto-related startups and firms in late September. In late August, Iran’s National Cyberspace Center revealed that the draft of the state-backed cryptocurrency project is ready, following instructions from President of Iran Hassan Rouhani. At that time, the deputy director in charge of drafting regulations for Iran's Supreme Cyberspace Council claimed that the idea of launching a national cryptocurrency is being actively pursued.<doc-sep>Iran has unveiled plans to launch its own national cryptocurrency, partly in response to crippling economic sanctions imposed by the US. The Central Bank of Iran revealed finalised details about the "indigenous cryptocurrency", according to Iranian news agency Ibena, which explained that it will be backed by Iranian rials. The state-backed cryptocurrency will be similar to bitcoin in that transactions are carried out on an online ledger called a blockchain, however it will not be possible for people to mine it because the infrastructure will be private. "The infrastructure is supposed to be as an ecosystem available for Iranian banks and active companies in cryptocurrencies area after being tested and reviewed," Ibena, which is affiliated with the Central Bank of Iran, reported. Bitcoin's volatile history in pictures Show all 10 1 /10 Bitcoin's volatile history in pictures Bitcoin's volatile history in pictures Satoshi Nakamoto creates the first bitcoin block in 2009 On 3 January, 2009, the genesis block of bitcoin appeared. It came less than a year after the pseudonymous creator Satoshi Nakamoto detailed the cryptocurrency in a paper titled 'Bitcoin: A peer-to-Peer Electronic Cash System' Reuters Bitcoin's volatile history in pictures Bitcoin is used as a currency for the first time On 22 May, 2010, the first ever real-world bitcoin transaction took place. Lazlo Hanyecz bought two pizzas for 10,000 bitcoins – the equivalent of $90 million at today's prices Lazlo Hanyecz Bitcoin's volatile history in pictures Silk Road opens for business Bitcoin soon gained notoriety for its use on the dark web. The Silk Road marketplace, established in 2011, was the first of hundreds of sites to offer illegal drugs and services in exchange for bitcoin Screenshot Bitcoin's volatile history in pictures The first bitcoin ATM appears On 29 October, 2013, the first ever bitcoin ATM was installed in a coffee shop in Vancouver, Canada. The machine allowed people to exchange bitcoins for cash Reuters Bitcoin's volatile history in pictures The fall of MtGox The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 after losing almost 750,000 of its customers bitcoins. At the time, this was around 7 per cent of all bitcoins and the market inevitably crashed Getty Images Bitcoin's volatile history in pictures Would the real Satoshi Nakamoto please stand up In 2015, Australian police raided the home of Craig Wright after the entrepreneur claimed he was Satoshi Nakamoto. He later rescinded the claim Getty Images Bitcoin's volatile history in pictures Bitcoin's big split On 1 August, 2017, an unresolvable dispute within the bitcoin community saw the network split. The fork of bitcoin's underlying blockchain technology spawned a new cryptocurrency: Bitcoin cash Reuters Bitcoin's volatile history in pictures Bitcoin's price sky rockets Towards the end of 2017, the price of bitcoin surged to almost $20,000. This represented a 1,300 per cent increase from its price at the start of the year Reuters Bitcoin's volatile history in pictures What goes up... Bitcoin price crashes spectacularly, losing half of its value in a matter of days Getty Images Bitcoin's volatile history in pictures Bitcoin plunges The cryptocurrency eventually bottoms out below $4,000 in 2019 before slowly rebuilding momentum to outperform more traditional assets Getty Images The country's central bank has previously been dismissive of bitcoin and other cryptocurrencies, however it was forced to explore new ideas after the US withdrawal from the Iran nuclear deal restored heavy economic sanctions. A domestic digital currency is seen as a solution for the country being cut off from international payments networks, with the technology facilitating the transfer of funds around the world. If the test with banks and financial companies in the country is successful, the cryptocurrency could roll out publicly. Iran Supreme Leader Seyyed Ali Khamenei said on Wednesday the country needed to do more to solve the economic problems it faces. "With regards to the economy, there is need for full force, large-scale and proficient work," Ayatollah Khamenei said, according to Iran's state-sponsored Press TV. "Authorities in charge of economic affairs must work hard day and night to resolve the problems." Iran isn't the first country to make a foray into the world of digital currencies, with Venezuela recently announcing radical economic reforms that will see its own state-backed cryptocurrency tied to the country's official currency. Venezuela's petro cryptocurrency is backed by the country's reserves of oil, gas, gold and diamonds, and is also designed to circumvent US sanctions and enable access to international financing. Within a month of its launch, US President Donald Trump signed an executive order to ban Americans from investing in Venezuela's cryptocurrency.<doc-sep>
Following in the footsteps of Venezuela, Iran is considering launching its own national cryptocurrency. In a preliminary step toward that, Iran's Supreme Council of Cyberspace said it was according legal status to the mining of cryptocurrencies, which had not been recognized as a legal activity until now. The relationship between Iran and cryptocurrencies has been fluctuating for a long time now. Recently, the country introduced a ban on changing local currency into cryptocurrencies and a ban on local banks' interaction with cryptocurrency exchanges. Now that the rial is losing its value as an effect of resumed U.S. sanctions, the country is considering issuing its own cryptocurrency and the first effective step toward the removal of the ban would appear to be the recognition of mining as a legitimate operation. IBENA, an Iranian financial and economic news agency, reported the government had finally accepted the mining of cryptocurrencies as a lawful activity. “A decision-making authority will declare the framework and final policies for trade and participation of startups and trade activists in the cryptocurrency sphere by the end of the current month (ending on September 22), but no definitive decision has been taken yet,” IBENA reported, citing Abolhassan Firouzabadi, secretary of Iran's Supreme Council of Cyberspace. The decision to legitimize mining was agreed with all other public sector related organizations in Iran, such as the Ministry of Information and Communications Technology, the Central Bank of Iran, the Ministry of Industry and Trade, the Ministry of Energy and the Ministry of Economic Affairs and Finance, although the final legislation policy had not yet been passed. With regard to the launching of a new cryptocurrency, Firouzadabi told IBENA “it is promising and can be used as a financial transaction instrument with Iran’s trade partners and friend countries amid economic pressures through U.S. sanctions.” Also, the National Cyberspace Center was working with the country's central bank to manage the regulation of the exchange rates from fiat to cryptocurrencies. Although the launch date of the national cryptocurrency was still unknown, the Iranian government released details about the currency which hinted it was in the final stages of development. Photo: REUTERS/Marco Bello Iranian technology company Informatics Services Corporation designed and developed the new cryptocurrency, which hasn't been named yet. ISC told IBENA the national currency was based on Hyper-ledger Fabric Platform technology, a blockchain framework which acts as a foundation for developing blockchain-based products, solutions, and applications using plug-and-play components aimed for use within private enterprises. The issuer of the Iranian cryptocurrency will be the Central bank of Iran, whereas it shall be developed under private blockchain infrastructure and cannot be mined further. “Other functions of this blockchain infrastructure include phase one as a token and interbank payment instrument and phase two as an instrument for retail payments in a society,” IBENA reported. In May, Mohammad Reza Pourebrahimi, head of the economic committee of Iran’s parliament, told IBENA the national cryptocurrency could pave the path for multilateral currency swap agreements between Iran and countries which were enthusiastic to have economic cooperation with the country, something Iran couldn't do so far due to the U.S. sanctions. The Trump administration announced in May the U.S. would withdraw from the international agreement signed between Iran and six world powers that eased sanctions on Iran in exchange for the country limiting its nuclear program. The resumed U.S. sanctions won't come into full effect until November, but a prohibition on purchases of dollars by the Iranian government and on purchases of Iranian rials by U.S. citizens began early August.