Nasser Hakimi, a senior official of Iran’s central bank says bitcoin trading is illegal in the country. Hakimi also issued warnings about the risks inherent in cryptocurrency trading given the incessant price fluctuations in the market.
Iranian authorities have also recently cracked down on mining activities accusing miners of putting too great a burden nation’s electricity grid. There are reports that Iran plans to adopt blockchain technology to upgrade its banking and finance sector to meet up with modern standards.
Bitcoin Trading is Illegal in Iran
Speaking to Tasnim, an Iranian media establishment, Hakimi, the deputy governor for new technologies at the Central Bank of Iran (CBI) declared that bitcoin trading is illegal in the country.
According to Hakimi, Iran’s Supreme Council on Countering Money Laundering prohibited any forms of cryptocurrency trading. The senior central bank officials, however, noted that the prohibitions only applied to the buying and selling of cryptocurrency and not to the mining process.
Given the re-emergence of tensions with the United States and the renewal of economic sanctions, some analysts predicted that Tehran might look to cryptos as a way of circumventing the financial blockade.
The global banking communication network SWIFT has also delisted Iranian commercial banks. The country’s fiat currency has also suffered devaluation forcing many to acquire cryptos with their bitcoin wallets becoming their de facto banks.
As previously reported by DemandSolutionNews, the CBI released a draft document containing preliminary regulations for the local crypto industry. Hakimi’s statement seems more likely to force BTC trading underground in Iran rather than stop the market entirely given the trends set in other places like China and India.
For Hakimi, crypto trading remains a risky proposition, one that citizens should avoid. The senior CBI official also advised investors to be wary of crypto Ponzi schemes.
Government Cracks Down on Miners
Despite the distinction drawn by Hakimi, the government has in recent times began a crackdown on bitcoin miners in the country. Iran has become a significant BTC mining arena as companies look to take advantage of cheap fossil-based energy.
This influx of miners has seen an increase in electricity usage which reportedly alarmed the government. Some mining farms are set up inside Mosques across the country due to the free supply of electricity.
With bitcoin gaining more than 220% since the start of the year, mining activity appears to be at an all-time high. The network hash rate — the computing power security the blockchain and the difficulty have reached record levels.
Last week, reports emerged of raids carried out on such establishments with over 1,000 mining rigs seized by authorities. Energy consumption ascribed to BTC mining remains a thorny issue for some government around the world.
Earlier in the year, CoinShares released the latest update to its bi-annual report showing that renewable energy powered more than 74% of global BTC mining.
Iran Developing Blockchain Banking Platform
Iranian authorities might be anti-bitcoin but the country has no problems with blockchain technology. The CBI is currently working with Areatak — a Tehran-based startup to develop a distributed ledger technology (DLT)-based banking framework.
Stakeholders say the project called Borna aims to improve the country’s banking and financial sectors. Borna is being built using Hyperledger Fabric — one of the DLT solutions created by the Linux Foundation.
When completed, Borna will also host private sector participants as a sort of operational sandbox for fintech solutions. The DLT framework will also serve as a unitary banking infrastructure for Iran which could become the basis for setting up cross-border transactions with other countries outside of the mainstream payment corridors.