The Iranian parliament has proposed to regulate cryptocurrency exchanges and digital currencies under the existing ‘foreign currency exchange’ regulations and ‘money smuggling’ laws, reported a local daily.
If the proposal is passed in the form of a law, then crypto exchanges would be required to obtain a license from the Central Bank of Iran just like foreign exchanges. This could especially turn problematic for a new emerging industry like crypto and might discourage budding startups and entrepreneurs due to fear of arrests and even sanctions from the United States.
The sudden decision by the government to heavily regulate the crypto industry could be motivated by the falling prices of the national currency due to hyperinflation and it appears that the government is trying to keep a check on the capital outflow.
Not so long ago the Iranian government looked bullish towards crypto industry and there were rumors that the government might be looking to launch a central bank-issued digital currency as well. Many believed cryptocurrency would be the saviour of the Iranian economy which has been in shambles due to numerous sanctions put by the USA.
While the proposal is on the table, it is still unclear how the government plans to regulate crypto exchanges based on rules formulated for the fiat system. The other factor that might make it even more complex is the fact that a majority of the Iranian crypto exchanges are legally based out of foreign countries.
For example, UtByte and the KingMoney token project which are clearly funded by Iranian businessman and meant to cater to the Iranian public are registered in Sweden. A couple of media outlets have flagged the two projects as a scam, despite that it is aimed at aiding Iranians in cross-border transactions.
While these foreign-based exchanges find a way around the new rules, the local small time businesses and startups would be the worst hit if these regulations are put in place.