Iran Plans to Regulate Crypto to Boost Economy and Counter US Sanctions

The Iranian government plans to regulate digital currencies, including Bitcoin and cryptocurrencies, rather than imposing restrictions on them, said the country’s Minister of Economic Affairs and Finance, Abdolnaser Hemmati, during a digital currency-focused event in Tehran, reported by state-run news agency Tehran Times.

The central bank recently approved a regulatory framework aimed at regulating cryptocurrencies in the country. Iran is under constant sanctions from the US and other Western nations.

The authorities are looking to harness the benefits of cryptocurrencies while mitigating potential negative impacts on the economy. The progress of digital currencies is also the reason behind the government’s shift in stance.

“Attempts to impose limitations have failed. Instead, we aim to manage their risks and capitalize on their benefits, including job creation and bypassing sanctions,” Hemmati said.

More Adoption Globally

Iran sees cryptocurrencies as a factor that could help stimulate job creation and economic opportunities through the development of the industry, according to Hemmati. The minister is also hopeful that these currencies could help Iran circumvent international sanctions and better integrate into the global financial system.

Iran has had a complex relationship with cryptocurrency. The central bank issued a ban on cryptocurrency transactions in 2018 due to concerns about money laundering and terrorist financing.

However, it was reported that the country put forward a draft of a cryptocurrency law, a move that effectively lifted the previous ban and signaled a shift to a more open stance towards digital currencies in Iran. The government also officially legalized crypto mining.

While the outright ban was removed, restrictions are still in place. Financial institutions are not allowed to conduct cryptocurrency transactions, though individuals can hold Bitcoin.

Central Bank of Iran is Establishing a Legal Framework for Crypto

Iran’s government and the central bank are working together to create an industry-friendly environment.

On Saturday, the Central Bank of Iran approved a legal framework for cryptocurrency regulation in the country, according to a separate report from the Tehran Times. Under the new framework, the central bank will be responsible for overseeing licensing, supervision, and compliance.

As reported, the forthcoming policies prioritize anti-money laundering and counter-terrorism financing measures. They also impose strict compliance standards on crypto-related businesses to prevent illicit activities.

Economist Mohammad Sadegh Alhosseini estimates that Iranians currently hold between $30 billion and $50 billion worth of cryptocurrencies. Meanwhile, the daily crypto trading volume is projected to top $143 million.

However, the expert warns that tightening government regulations on cryptocurrencies could expose these activities to increased scrutiny and potential sanctions. Iranian businesses and exporters have long leaned on cryptocurrencies after being excluded from the SWIFT banking system.

Alhosseini suggests that the authorities should consider delegating some regulatory responsibilities to private companies and associations in order to create a disciplined cryptocurrency market.

Iran, becoming a member of the BRICS economic organization since January 2024, reportedly is exploring ways to create financial systems that do not rely on traditional banking networks. The country previously aimed to create a state-backed cryptocurrency, a national virtual currency that may facilitate transactions between banks and institutions.

Not only Iran, the BRICS nations are also mulling over the adoption of Bitcoin and other cryptocurrencies as part of their ongoing strategy to reduce reliance on the American dollar.

Russia, a founding nation of the entity, recently recognized digital currency as property for use in foreign trade settlements. Under the new law, profits from cryptocurrency mining and sales are exempt from value-added tax.

In the meantime, digital currency transactions will be taxed at a two-tier system, with 13% tax on earnings up to 2.4 million rubles and 15% over this threshold.

This new legislation came after President Putin legalized cryptocurrency mining in the country.