Iranian officials have been working diligently in the background, ostensibly to reverse its general ban on cryptocurrencies and to produce a framework that will mesh well with its plans for a national cryptocurrency, to be backed by the Rial and managed by the central bank. The central bank chose the eve of a national Electronic Banking and Payment Systems conference to announce its initial draft of crypto regulations.
The discussion draft, labeled “Version 0.0”, is subject to change, based on comments and feedback received, but no implementation schedule was noted. Although the draft eliminates the crypto ban on international cryptocurrencies, it still places restrictions on their use within the country.
According to bank officials, the new rules will aim at “organising and defining boundaries of ongoing crypto operations in the country, and allowing traders to plan for their future”. Iranian traders now account for roughly $10 million a day in Bitcoin transactions, but under the new rules “digital tokens can only be operated by certified banks, and can be traded in licensed crypto exchange bureaus”. Furthermore, the only tokens that will be permitted for use in domestic payment transactions must be backed by the Rial, which may only be the national cryptocurrency when implemented.
Central bank executives attended the conference, as well, to assure attendees that the draft was not the final word. Officials want and need feedback, before final regs can be solidified. Mohammad Javad Azari Jahromi, Iran’s information technology minister, believes the new rules are “a move in the right direction”, but he cautioned that the restrictions “might not be well received by crypto players”.
It did not take long to field an opinion from the crypto community. Al Jazeera interviewed Perhman Azhdarpour, a local 28-yearold crypto trader, who remarked:
The ban on using internationally accepted cryptos as payment methods can negatively affect the work of me and many like me. We were hoping the central bank’s stance would not again restrict the use of bitcoin and other cryptocurrencies in any way.
The original ban had been put in place to protect the national currency, the Rial, from depreciation in global forex markets. Estimates as of May of 2018 suggested that, “More than 2.5 billion dollars has been sent out of the country for buying digital currencies.” The new rules also established a limit on the value of crypto holdings held by any Iranian citizen, much in the same way that a limit of $10,000 Euros applies to the holding of foreign currency.
There is a sense of urgency that is palpable regarding these new regs, as well as with deliberations concerning the national Rial-backed cryptocurrency. Speculation is that the imposition of global sanctions on Iran and its citizens is driving both crypto-related efforts. There have been stories of seizures of Bitcoins from Iranian citizens and of specific national banks being denied access to SWIFT, a necessity for settling any cross-border wire transfers. Iran needs alternatives.
Iran is not alone in these sanction-evading objectives. Venezuela has already developed a national crypto-coin, the Petro, to rejuvenate its local economy and avoid U.S. and EU restrictions. News of success on both fronts has not been forthcoming. Russia is also on the record as developing of a Ruble-backed cryptocurrency and is currently in discussion with Belarus, Kazakhstan, Armenia and Kyrgyzstan for a regional version.
News today is that Iran is also in talks with eight other countries for the sole purpose of carrying out financial transactions. It is uncertain if Iran’s announced plans for a national cryptocurrency were on the agenda, although sources believe that the issue of using cryptos to circumvent sanctions was discussed. The eight countries were Switzerland, South Africa, France, the United Kingdom, Russia, Austria, Germany, and Bosnia.