In a development that could give breathing space to the Iranian economy and the falling value of the country’s currency, Rial, the Central Bank has issued draft rules and guidelines with respect to the cryptocurrency market, in effect recognizing Bitcoin and other cryptocurrencies. This reverses the Bank’s own ruling in April 2018 when it banned any cryptocurrency dealings, including Bitcoin anywhere in Iran.
The new rules come in light of Iran’s own efforts to launch a native cryptocurrency, the ‘Crypto-Rial.’ It is part of a sustained effort on the part of Iran to reverse the adverse effects of the American sanctions on its economy. US sanctions, imposed by the Trump administration in response to Iran’s nuclear programme have tanked the Iranian economy by closing the country to the global financial transaction network.
The draft dubbed ‘Version 0.0’ not only recognizes Bitcoin among other cryptocurrencies but also the initial coin offerings, tokens, cryptocurrency wallets as well as cryptocurrency exchanges and bureaus. However, the use of Bitcoins or any other cryptocurrency as a form of payment in the country remains prohibited by the Central Bank. Any payments still have to be made using the Rial.
Furthermore, it also restricts Iranians from holding huge amounts of cryptocurrencies in their wallets, a move very similar to the €10,000 cap Iran had imposed on its citizens from holding in their bank accounts.
This development has also lent more urgency to the State’s own development of a cryptocurrency, which Iran hopes will be ready for launch soon.
According to the acting head of Iran’s Trade Promotion Organization, Iran is presently negotiating to introduce cryptocurrency to financial transactions with representatives from eight countries including Russia, Switzerland and South Africa. Iran is also presumed by many to be a part of the Russia-led group that is developing an alternative to the SWIFT financial network.