A special taskforce to integrate efforts for regulating cryptocurrencies has been set up by the government.
The National Taskforce of Cryptocurrencies held its first meeting in Tehran last week to debate the implementation of the recently approved cryptomining regulations, Way2pay website reported at the weekend.
It was established on recommendation by President Ebrahim Raisi and will function under the auspices of the Vice Presidency for Economic Affairs and will convene twice a month.
The declared aim of the group is to enhance coordination between state bodies and institutions relevant to crypto. The Central Bank of Iran, Ministry of Intelligence, Oil Ministry, Energy Ministry, Ministry of Industry, Mining and Trade and the Ministry of Economy are among members of the taskforce.
According to Way2pay, the vice president for economic affairs, Mohsen Rezaei, chaired the first meeting on Tuesday to delineate crypto priorities.
The issue of cryptocurrencies is seen in Iran as a rather complex issue compared to previous regulatory challenges as no state body is willing or able to accept responsibility in this sector whose future is unclear, to say the least. Moreover, setting regulations for the digital currency by one state body is apparently no possible due to its multi-definitional nature.
New Rules
First Vice President Mohammad Mokhber in November announced new rules for crypto assets, adding some detail to regulations approved in 2019.
Henceforth cryptominers should get special permits from the Ministry of Industries, Mining and Trade plus permission from the same ministry for importing equipment. The Iran Standard Organization should also approve the mining devices before use.
The government has announced details about power supply to the mining centers. Licensed miners have options for access to electricity for their farms, including establishment of on-site renewable power plants, buying power from renewable plants or start their own small power generators.
For electricity and gas the cryptominers will have to pay their bills based on export tariffs and are obliged to reduce operations by half in the peak summer seasons.
Electricity prices for cryptomining are set according to export tariffs and subject to currency rates at Nima -- the currency platform where forex is traded among importers and exporters.
New rules require the ministries of oil end energy to announce power rates on a quarterly basis and inform miners about peak season adjustments in advance.
Among other things, the new regulations state that mining crypto assets by using power (natural gas or electricity) sold for other usage is illegal and those in breach will be penalized.
Before imposing penalties, in the past Iran Power Generation, Transmission and Distribution Company, Tavanir, used to confiscate illegal cryptomining equipment and cut the electricity. Offenders were obliged to pay for the damage to the national grid.
Tavanir, the main utility company in Iran, has urged policymakers to further tighten the rules targeting illegal miners and insists that “the existing regulations are not preventive enough.”
Recently it said more than 7,200 unauthorized cryptomining centers were found and shut since 2020. Illegal miners used 3.84 trillion rials ($16.5 million) in subsidized electricity and inflicted 380 billion rials ($1.3 million) in damages to the national grid, the company said.
Unconvincing
Observers, however, are not convinced and say the new rules do not go far enough in addressing the drawbacks and deficiencies that have long deprived the sector of growth it deserves.
The Majlis Research Center, the research wing of the parliament, has also taken a stance on the negative impact of the government ban on cryptomining and closure of unauthorized mining centers and dismissed it as an exercise in futility.
Like previous regulations, the new rules only cover mining of cryptocurrencies, extending the ban on crypto trade. Traders are said that they should take responsibility for using cryptocurrency and beware that the risks will not be covered or compensated by the government and banks.
The Central Bank of Iran is tasked to develop a platform to enable licensed miners sell their output to be used for imports.
Back in August, Iran's Trade Promotion Organization said $10 million in cryptocurrency was used recently for settling an import bill, noting that the country is targeting implementation of smart contracts in foreign trade.
The ICT Ministry is tasked to announce supervisory solutions for miners' power consumption.
In the previous regulations, mining cryptocurrencies was taxable tax breaks were offered to crypto miners who repatriated their earnings to the country. However, the government later decided to remove the exemption and treat cryptominers like other exporters.
Cryptocurrency mining centers can be established in the free trade zones where local authorities are in charge of licensing instead of the Industries Ministry.
Officials have proposed transforming Iran’s Kish Island in the Persian Gulf into a hub for domestic and international cryptocurrency exchange.
Per law, miners can use excess output from power grids in the Kish free and special economic zones. Power generated in the FTZs cannot be used in the mainland nor be traded. Therefore, the excess production can be used for cryptomining.
