The measure would face its implementation to set a reduced capital flight in the country. It appears to be related to formal protocols in the nation since trading, in general, is unauthorized.
Iran would have banned transactions with bitcoin and cryptocurrencies that go through its mining and extraction procedures outside the country. Press reports indicate that the central bank is up to apply these new measures to restrict operations of this nature in the Persian nation.
“The central bank stated that according to the Cabinet decision, trades in digital currencies mined abroad is forbidden and only currencies mined within the country can be traded,” reported Iran International channel which is an entity with operations in London.
The measure intends to minimize capital flight due to the loss of value of the rial, the national currency. However, it would be a governmental formalism since bitcoin trading is unauthorized in the nation.
The situation is whether trading with cryptocurrencies mined in Iran would receive authorization to be exchanged on local exchanges, it remains unclear to the date. It is relevant to remember that Bitcoin mining is officially legal inside the country, but cryptocurrencies must find their purchases by miners to the Central Bank of Iran (CBI).
The bank’s decision was a matter of discussion to lawyer Fatemeh Fannizadeh, who posted a series of messages on Twitter. In one of them, the analyst highlighted that what Iran would seek is to export cryptocurrencies mined in its territory more aggressively and encourage local mining.
The specialist explained through his tweets is that he doesn’t think it applies on an individual level. He said that Instead of a total ban, the measure would allow banks and currency exchange houses to use Iranian cryptocurrencies for international transfers.
Iran Uses Bitcoin to Keep a Stable Economy
Iran has shown an ambiguous position regarding digital currencies. First of all, mining is a legal activity since 2019, but exchanges or payments in establishments with bitcoin are not allowed.
Receiving sanctions from the United States of America and not being connected to the SWIFT interbank transaction system would make Iran turn to digital assets as an alternative to evade economic blockages. The government even recently allowed banks to pay for imports with the main cryptocurrency.
Neither the central bank nor the Iranian government have explained how they would manage to keep cryptocurrencies mined abroad out of the country, something that goes against the fungibility of bitcoin and other cryptocurrencies.
How Bitcoin Mining in Iran Works
Bitcoin mining in Iran is legal and requires the issuance of an operating license. Without this authorization, clandestine farms are under risk of being closed and confiscated, as has happened in the past. Non-legalized miners seek to gain more advantage of subsidized electric power that is available to the general population.
According to the Center for Alternative Finance at the University of Cambridge, Iran is the sixth country with the highest processing capacity on the Bitcoin network with 3.82%. The ranking is led by China, the United States, Russia, Kazakhstan, and Malaysia.
By: Jenson Nuñez