Iran’s Central Bank (CBI) has banned its citizens from trading Bitcoin and other cryptocurrencies mined abroad, according to an announcement shared by Iran International.
Fatemeh Fannizadeh, a Swiss-qualified independent lawyer and advisor on blockchain technology and cryptocurrencies, believes this move by the CBI is an attempt to stop capital flight from Iran.
“Crypto is already regulated in Iran … that just means that Iran wants to export more aggressively Iranian-produced coins, promote mining and fight capital flight in the face of a pejorative rial,” Fannizadeh shared on Twitter.
The rial, Iran’s fiat currency, has seen a sharp devaluation recently and hit a record low against the dollar in 2020. Hence, it seems reasonable that the CBI would proceed with protectionism from a monetary point of view in relation to its currency and economy.
Interestingly, the move makes it seem like the CBI is treating bitcoin mining and trading as regular commodity activities. As a result, the central bank is trying to maximize exports and minimize imports to benefit Iran’s trade balance, which has been suffering since the pandemic began.
Bitcoin and especially Bitcoin mining have a unique status in Iran compared to any other country on earth. Access to subsidized electricity would, in theory, make it a great place to mine BTC, but local officials have offered mixed regulations that encourage and discourage the practice. More recently, Iran has tried to control the bitcoin mining industry by requiring that mining be officially sanctioned and then allowing these miners to use the resulting bitcoins to pay for imports. Cryptocurrencies like Bitcoin can be powerful tools to help Iran bypass international economic sanctions.
But such protectionism as this reported ban doesn’t seem very enforceable for Bitcoin users. Since Bitcoin issuance is decentralized and uncensored, it is unclear how the central bank would enforce these restrictions.