Cryptocurrency business leaders discussed the challenges and roadblock’s they face with President Ebrahim Raisi in a meeting last week.
The meeting was held to discuss the views and concerns of the crypto industry players and address the potential benefits of digital currencies, regulatory challenges, and crypto opportunities for the digital economy.
Amir Hossein Rada, CEO of Nobitex, a major cryptocurrency exchange, talked about the many challenges crypto companies have been grappling with. He emphasized the need for clear laws and regulations, the lack of which he said is one of the biggest challenges. Rada noted that the lack of regulations had led to the “emergence of harmful actors” in the industry and skepticism from decision-makers.
“Companies and industry players need to be more proactive in addressing crypto challenges as the regulatory delays have indeed created the foremost difficulties for their operations. Such delays have undermined competitiveness and opportunities in international markets.”
Rada also highlighted the potential benefits of digital currencies in facilitating international finance, maintaining the security of digital assets in the country, helping with currency exchange through mining, improving transparency in transactions and creating jobs in the hightech and computer science fields.
He called for a long-term perspective on cryptocurrency investment, suggesting that a regulatory bill be created to control risk and legal crypto activities.
President Raisi tasked the National Center for Cyberspace with reviewing the proposals made at the meeting to prepare the groundwork for a bill to control crypto investment risks.
He emphasized the importance of increasing the digital economy's share in Iran from 7% to 10%, with further increases possible with the help of tech-based companies.
As the crypto industry grows, it is essential for officials to take early action and create a legal framework to enable industry players to participate in the global market. A regulatory bill would provide the much-needed security and transparency for companies operating in the crypto industry, allowing them to grow and compete globally.
Last week, Ehsan Khandouzi, the economy minister, said that the matter is under consideration by the Digital Economy Workgroup the details of which will be approved in this committee before being made public.
The government in Tehran have yet to approve a bill that would regulate digital currencies, despite the issue being raised eight months ago. In August 2020, Khandouzi announced a bill aimed at legislating digital currencies, with the intention of regulating and facilitating activities in this sector.
The bill is expected to be approved soon. However, despite the several announcements and demands from the crypto industry participants for transparent regulations the bill has been in limbo.
Past Regulations
First Vice President Mohammad Mokhber in November had announced new rules for crypto assets in addition to those approved in 2019.
As per the rules, cryptominers are obliged to receive special permits from the Ministry of Industries, Mining and Trade for importing equipment plus the approval of the Iran Standard Organization for using them.
Later, the government outlined details about supplying power to mining centers. Licensed miners have been given options for accessing electricity for their farms, including the establishment of on-site renewable power plants, or using their own small power generators.
Miners using electricity and natural gas will have to pay their bills based on energy export tariffs and must reduce operations by half in the summer season.
Electricity prices for cryptomining are subject to currency rates at Nima – the currency platform where forex is purchased by importers from exporters.
New rules require the ministries of oil and energy to announce power rates on a quarterly basis and inform miners about peak season adjustments in advance.
In the previous regulations, tax breaks were offered to miners who repatriated their earnings to the country. However, the government later decided to remove the exemption and treat cryptominers like all other exporters.
Cryptomining centers can be established in the free trade zones where local authorities are in charge of licensing instead of the Industries Ministry.
Among other things, the new regulations state that mining crypto assets by using power (natural gas or electricity) allocated for any other purpose is illegal and those in breach will be penalized.
Before imposing penalties in the past, Tavanir used to confiscate illegal cryptomining equipment, cut electricity and oblige offenders to pay for damages inflicted on the national grid.
However, at present, Tavanir has urged policymakers to tighten the rules targeting illegal miners and insists that “the existing regulations are not deterrent enough.”
According to Tavanir, more than 7,200 unauthorized cryptomining centers have been identified and closed since 2020, which used 3.84 trillion rials ($16.5 million) in subsidized electricity and inflicted 380 billion rials ($1.3 million) in damages on the national grid.
Observers, however, say the new rules do not go far enough in addressing the deficiencies and preventing losses.
The Majlis Research Center, the research wing of the parliament, has also taken a stance on the negative impact of the government’s lack of regulations on cryptomining and dismissed what exists as a failure. Like previous regulations, the new rules only cover crypto mining and extend the ban on crypto trade.
"Traders should take responsibility for using cryptocurrencies and beware that the risks will not be covered or compensated by the government and banks," it said.
The Central Bank of Iran is tasked with developing a platform through which licensed miners can sell their cryptocurrency for imports.
