Domestic Economy

Fintechs Say: Confining Crypto Exchanges Is Unwanted and Unhelpful

Fintechs Say: Confining Crypto Exchanges Is Unwanted and Unhelpful
Fintechs Say: Confining Crypto Exchanges Is Unwanted and Unhelpful

The Iran Fintech Association, an independent body of fintech startups, has responded to attempts by parliament and financial authorities to impose restrictions on cryptocurrency exchanges.
In a letter to the Majlis speaker, Mohammad Baqer Qalibaf, and the CBI boss Abdolnasser Hemmati, IFA warned against hasty decisions.
"Resorting to restrictive measures is the simplest, but not the best, response to the issue [of cryptocurrencies]. Doing so would deprive the nation of potential opportunities and create grounds underground business."
Lawmakers last week expressed concern over the growing interest in investments in cryptocurrencies, calling on financial authorities to exercise caution in dealing with the controversial aspects of digital currencies.
On the central bank’s move to restrict crypto exchanges, IFA claimed "there are no regulations per se barring the work of crypto exchange.”
The group added that "Government regulations only ban using cryptocurrencies for purchasing goods and services. It is explicit that trading cryptos is not illegal though traders are accountable for the ensuing risks."
Earlier in March, in line with the government’s anti-money laundering measures the central bank ordered Shaparak, the local payment settlement network, to block online payment gateways owned by crypto exchange websites.  
Lawmakers said last week that imposing a ban on crypto trade in and of itself is not enough. The Central Bank of Iran is in charge of authorizing exchange shops and needs to develop precise regulations vis-à-vis the function of the exchanges and block their access to payment gateways until the rules are finalized.
"All the decision-making bodies need to pool minds to develop regulations that are comprehensive and efficient," the association said, noting that the central bank alone is not up to the job.
Hemmati said last week the government is working on measures to limit trade only to those who mine cryptos legally. "Bitcoin trade will be allowed only for commercial purposes and will be handled by selected moneychangers appointed by the CBI."

Evading Sanctions

Startups believe that using cryptocurrency has helped Iranian businesses bypass the US economic blockade, namely tough restrictions on banking, industries, shipping, and insurance. “Several businesses have either used the technology for meeting their needs or have invested in cryptocurrencies without any particular risk."  
"We propose that policymakers scrutinize the multi-dimensional issue in special working groups including market players to avoid unsuccessful experiences of the past."
Cryptocurrency gained traction among Iranians in the past few weeks as its international value skyrocketed amid Iran's sluggish financial markets. With the prolonged bearish trend in the stock market, observers say liquidity has increasingly fled from the bourse as investors seek safe havens like cryptos.
Mining the virtual currency is considered a legal industry and miners are allowed to operate legally under rules approved by the government in July 2019.
So far 24 cryptomining centers and farms using 310 MW have permits from the Ministry of Industries. The government sells electricity to legal miners at tariffs much higher than the subsidized rates to regular subscribers, which has exacerbated illegal mining. 

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