Iran’s government on Saturday ratified regulations for legal cryptocurrency mining, as per which cryptocurrency mined by authorized miners would be used for imports.
The measure proposed by the Central Bank of Iran and Ministry of Energy, requires licensed cryptominers to sell the coins they mine directly to the CBI, IRNA reported.
The Ministry of Energy is tasked with defining a ceiling for output of authorized crypto units subject to the energy consumed by each unit. Miners' output should not exceed the ceiling. The CBI said it will announce details soon.
This is the first time the CBI has authorized trade in cryptocurrencies. In April 2018 it had banned all the financial institutions from dealing in cryptocurrency. Average daily crypto transactions in Iran is estimated to reach $10 million to $40 million.
The ban, originally decided on Dec. 30, 2017 by the High Council of Anti-Money Laundering – a body independent of the CBI which is the official regulator of cryptocurrencies — was communicated because “virtual currencies have the capability of becoming instruments for money laundering and financing terrorism, as well as means of transferring money [in possession] of criminals.
However, in July 2019 the government legalized cryptocurrency mining. The Ministry of Industries Trade and Mining was told to authorize prospective miners. As per rules, miners are charged 4,800 rials for one kilowatt-hour of electricity, which is half the export rate in autumn, winter and spring. However, billings are planned to be based on 19,300 rials/kw, twice the price for exported electricity in summertime (June to Sept).
It can be inferred from the announcement that the government has implicitly allowed using cryptocurrencies for payment and trade outside of Iran. “Using cryptocurrencies for transactions inside the country is prohibited.”
The CBI said earlier that activities related to crypto currencies are illegal, and banned the people and organizations from joining payment networks operating on blockchain technology.
Dodging Sanctions
Following the US administrations unilateral withdrawal from the Iran nuclear agreement and imposition of sanctions in 2018, experts proposed the CBI allow use of the technology to evade the hostile economic restrictions.
In a report published in 2018, the Majlis Research Center called for the targeted use of cryptocurrencies to circumvent sanctions imposed by the belligerent US president, Donald Trump.
"According to experts, one way to avoid the adverse effects of the unjust sanctions is to use cryptocurrencies for foreign trade," the report said.
However, other experts and market analysts argue Iran’s commercial and financial transactions are heavy to be handled by newfound technologies like blockchain.
