Iran’s central bank has issued a statement banning the country’s banks and financial institutions from dealing with cryptocurrencies such as bitcoin, citing money laundering and terrorism financing risks. However, the local crypto community in Iran believes that the ban will not affect them and some exchanges continue to operate normally.
Banned by Central Bank
The Central Bank of Iran (CBI) has issued a statement on Monday banning the use of cryptocurrencies including bitcoin by banks and financial institutions. This announcement came “amid ongoing debate over how best to regulate the technology,” the AFP elaborated.
According to the CBI, “the government’s money laundering committee had taken the decision in late December and it was now being put into effect,” the news outlet conveyed and quoted the central bank explaining:
All cryptocurrencies have the capacity to be turned into a means for money laundering and financing terrorism and in general can be turned into a means for transferring criminals’ money.
The central bank noted that banks and financial institutions in Iran were informed a few days ago, Mehr News reported.
The ban comes at a tenuous time for the Iranian economy. Between now and May 12, both the EU and the US are expected to decide on a new round of economic sanctions targeting Tehran. This could restore the harsh international controls on Iran that were lifted in the 2015 nuclear treaty between Iran and six major powers, including the US.
Effects of Crypto Community in Iran
Monday’s announcement follows another prohibition recently announced by the central bank, banning foreign fiat currency exchanges.
The Iranian government has mixed views on cryptocurrency, however. In February, the country’s telecom minister, Mohammad-Javad Azari Jahromi, tweeted the news that his ministry and the CBI are investigating the prospect of running their own initial coin offering (ICO) together. The resulting cryptocurrency would serve as “an experimental model for the country’s banking system,” he believes.
While many people in Iran see cryptocurrencies as a way to overcome problems with international sanctions and the country’s banking system, there are also those who fear “the technology could undermine the country’s already weak banking system and exacerbate capital flight,” the AFP explained.
“Iranians working in the fledgling private cryptocurrency market said the ban was unlikely to affect their operations,” the publication further described. A local crypto exchange Coinex has, however, halted activity on its platform in response to the central bank’s action, citing “we always want to make sure we comply with the law,” Hadi Nemati, who works for the exchange, told the news outlet. “But I have seen other crypto exchanges were still working normally,” he clarified, adding:
This ruling referred directly to banks, financial institutions and currency exchangers that work with the central bank…In my opinion, it doesn’t include the general public — it’s not a total ban on cryptocurrencies.
What do you think of the Iranian central bank’s action? Let us know in the comments section below.
Images courtesy of Shutterstock and Mohammad-Javad Azari Jahromi.
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Author: Kevin Helms