The Central Bank of Iran (CBI) has officially banned transactions and trade in cryptocurrencies mined outside the country.
"Accordingly, authorized exchange offices and banks can make foreign exchange payments for import through cryptocurrencies mined in the country (…), but trading and buying and selling other cryptocurrencies are not allowed".
— fat☆bat (@Fatalmeh) May 6, 2021
The latest stance against the deregulation of open trade across the crypto streets comes in the wake of Bitcoin’s meteoric price surge since mid-December 2020, which in turn fed a growing appetite in Iran for crypto assets after the country’s stock bubble burst in the same year.
What Was Happening Before
Oil and natural gas deposits in energy-abundant Iran make Bitcoin mining pretty cheap and lucrative, and since legalizing crypto mining (but not trading) in 2019, Iran has looked toward cashing in on the industry to its advantage.
In October 2020, the government of Iran began looking for a way to bypass the hamstring of U.S. sanctions that were imposed by the Trump administration. In this regard, the country’s Central Bank directed concerned parties to solicit a model, whereby all the registered Bitcoin miners within Iran sell their tokens to the bank. This was a big move, as it provided the country a substitute for bypassing foreign currency restrictions.
What They’re Doing Now
Today, the Iranian government has officially banned crypto trade of foreign-mined digital currencies, and this prohibition comes with some obvious logistical hurdles of its own, including the puzzle for “how exactly one ensures foreign BTC stays out of Iran”.
A local attorney made a statement in this regard, explaining that the prohibition won’t ” be enforced on an individual level. Exchange platforms can basically not operate. But instead of a blanket ban, it allows banks and forex offices to use Iranian crypto for international transfers”.
So where does that leave the future of crypto in Iran? The last sentence in the quote above is very important, as it simply states that Iran wants to export its coins more aggressively, encourage domestic mining of cryptocurrencies and counter capital chaos in the face of a depreciating Rial (Iranian currency).
Note that the Iranian Rial has lost more than 80% of its value against the US$ between January 2017 and January 2021, while at the same time, the Bitcoin shot up 3,800%, giving the Iranians all the more reason to locally mine its own coin.