Iran Digital Currency Regulation on the Way

A draft proposal for regulating digital currencies has been developed by Iran’s National Center for Cyberspace and is set to be passed by the High Council of Cyberspace in the next four months, an official at NCC said.

“We had come up with five scenarios for regulating digital currencies in Iran ... NCC’s Commission for Regulations has favored a scenario that focuses on taking a lawful approach to make the best use of digital currencies,” Saeid Mahdavioon, NCC’s deputy for regulation, was quoted as saying by Majazi.ir, the news website affiliated with NCC.  

The Commission for Regulations has been studying the economic aspects of digital currencies, whereas security issues have been simultaneously reviewed by another commission.

“The two commissions will hold a meeting in the next two months to finalize the proposal,” he said.

Defining a role for all involved parties and establishment of a committee to upgrade regulations are among key issues addressed in the proposal.

The widening use of digital currency, specifically bitcoin, in recent years has prompted officials to implement regulatory measures.

Back in 2013, when bitcoin trade in Iran was limited to a small number of exchange websites and online markets like LocalBitcoin, a group of 15 official bodies started to work on the framework for regulating digital currencies in the country.

Studies conducted by the Central Bank of Iran, Majlis Research Center, Security and Exchange Organization, Telecoms Ministry and the police department have helped NCC prepare the draft proposal.

However, a comprehensive framework has yet to be defined for cryptocurrencies.

Currently, as the bitcoin price has hit an all-time high ($2,713), several Iranian websites have taken to trading bitcoins and other digital currencies. All transactions take place instantly through the payment network Shetab.

According to DigiArz, bitcoin was sold at 108 million rials ($2,887)–112 million rials ($2,950) in the Iranian market on Tuesday.

Mahdavioon said the police know that trading bitcoin is illegal, but they have no legal mandate to stop it.

However, a number of these websites have received a special license from E-Commerce Development Center’s for trading “cyber currencies”. They also have strict policies regarding users’ identification.

Central Bank’s Stance

The National Center for Cyberspace is leading the way in regulating digital currencies in Iran. However, several experts consider the Central Bank of Iran as the body best positioned to monitor the market, though they have not directly commented on NCC’s move.

“Bitcoin activities include money creation, so the Central Bank of Iran needs to set the ground rules and supervise related activities, otherwise this would disrupt the economic cycle,” Faramarz Khaleqi, the CEO of Bank Melli Iran's informatics company Sadad, said.

According to Khaleqi, CBI needs to intervene and determine the regulations before bitcoin activities affect the market.

As per the law, only the central bank and the banking system are allowed to create money by issuing money and checks.

In an earlier interview with Mehr News Agency, Mahdavioon said CBI considers digital currencies as commodities, putting the Securities and Exchange Organization in charge of the matter.

Later, in December 2016, Nima Amir Shekari, the head of e-banking group at the Monetary and Banking Institute, told Way2pay.ir that CBI has adopted a "wait-and-see" policy toward digital currencies, which he defines as showing restraint while remaining positive.

“The central bank has made no official comments about bitcoin,” he said, calling on CBI to allow a limited number of exchange shops to start trading digital currencies on a trial basis.

Shahab Javanmardi, CEO of Bank Pasargad’s Fanap ICT, believes that CBI should develop a bill regarding digital currencies and send it to the parliament.

“But before taking any measure, the government needs to make it clear whether it wants to authorize digital currencies or not,” he told Financial Tribune’s sister publication Tejarat-e Farda weekly.

Javanmardi stressed that any measure should be based on the government’s vision.