Central Bank of Iran Bans Foreign Deposits; ‘Locally-Mined BTC Only’ Policy for Bitcoin Users
Iran’s central bank has introduced a ban on all Bitcoin (BTC) – just not those mined in the country. According to a report by Iran International, Bank Markazi, the central bank of Iran (CBI) has prohibited the trading of Bitcoin not mined in the country. The latest directive by the CBI aims to preserve capital in the sanctions-ridden economy, having previously banned any BTC trading in the country.
The country introduced legal Bitcoin mining contracts for sanctioned miners in the country. These miners leverage the cheap electricity from its large oil reserve deposits, making it cheaper to mine BTC than in most countries.
At the height of US-Iran tension that caused multiple sanctions on Iran, placed by the Trump Administration, Iran turned to Bitcoin to save their hyper-inflated Iranian rial. In January 2020, Iran’s Ministry of Industries, Mining, and Trade granted over 1,000 Bitcoin miners licenses in a bid to increase their foreign exchange reserves. Later in the year, the Iranian government allowed citizens to use Bitcoin mined in the country for international trade – in a bid to bypass the dollar due to U.S. sanctions.
However, the new laws bring about challenges on how exactly they will be implemented. How will the government separate the locally sourced BTC from foreign ones?
Speaking on the subject, Swiss Attorney Fatemah Fannizadeh stated the law might not be easily implemented to individuals. “Exchange platforms can basically not operate,” Fatemah explained. “But instead of a blanket ban, it allows banks and forex offices to use Iranian crypto for international transfers.”
With the recent calls for locally mined BTC growing stronger, Iran aims to bypass all sanctions while saving its currency from hyperinflation, she further said. Additionally, allowing exclusive Iranian BTC in the country may spike the number of miners the country in an effort to produce more BTC.