Binance is one of the biggest platforms in the world for trading with cryptocurrency, and they change what they need to change to make it possible to function in the countries that welcome them. In Iran, there are many international sanctions that they must comply with to function. As such, Binance issued a piece of advice to users in the area – withdraw your assets.
Iranian users were provided with an email, which said, “If you have an account with Binance and fall into that [sanctions] category, please withdraw your assets from Binance as soon as possible.” Apparently, emails like these have been arising for months, but they only increased in frequency as renewed U.S. sanctions came into play, according to Sepehr Mohamadi. Mohamadi is the chairman of the board of the Blockchain Association of Iran.
When the emails began, the platform was primarily silencing accounts for users that had included their Iranian passports as part of the Know-Your-Customer (KYC) protocols. However, in this week’s round of emails, they were also warning accounts that were linked with Iranian IP addresses to withdraw as well. A researcher for Areatak, Nima Dehqan, commented, “Iranians are not really able to trust cryptocurrency exchanges. That isn’t really something new.”
Iranian users have struggled over the last year to participate in cryptocurrency. Even BitMex and Bittrex are some of the users that have banned these users from using their services. The even bigger struggle with the ongoing bans is that there are allegedly some platforms that are not even refunding the cryptocurrency that the users entrusted to them.
John Collins, an FS Vector partner in Washington D.C. and Coinbase’s former head of policy, said, “It would be difficult [for the exchanges] to serve users in these jurisdictions if they want to serve American citizens. It’s logical to say that many companies are looking to the States right now and adapting to the U.S. regulation.”
Due to these changes, the Iranian bitcoin community has had no other choice but to work together for the creation of local businesses and to support networks, according to Dehqan. She continued, saying, “We do actually have cryptocurrency groups in Telegram or WhatsApp for people who want to change their cryptocurrencies in person. People have to trust each other. It’s a bit of closer-knit community in Iran.” To create these opportunities, there are also some physical shops setup, following traditional KYC regulations.
The actions that the U.S. regulations have taken against some trading platforms (like EtherDelta) have encouraged some Americans to be more cautious about the KYC process. This could alter the functions at Binance, considering that about 13% of their activity comes from the U.S.
Attorney Nelson Rosario, who specifically works with legal issues in cryptocurrency in Chicago, said, “Regulators are starting to focus more on exchanges.” In reference to Binance’s recent decisions, he continued, “This is an example of how operating a business that deals with people all around the world can be extremely complex and it is nearly impossible to identify all the potential pitfalls in advance.” However, Rosario commented that Binance does not actually have operations in the U.S., and the regulators focus has been on the local companies.
Right now, the separation from Iranian users is coming at the same time that the Iranian authorities are working on a national cryptocurrency, much like what Venezuela did with the Petro. In a statement to CoinDesk, Mahmoud Eskandari, a Binance users and blockchain developer in Tehran, voiced his concerns that the Iranian government is looking to “completely dominate the economic crisis” by taking over the crypto market.
Due to a shared concern with much of the Iranian users, small mining operations are being established lately, opting to leave external platforms behind. However, the fewer options have not dampened the enthusiasm that locals have for the cryptocurrency market. Furthermore, Dehqan commented that the advice from Binance has not impacted the crypto community by much. The traders and investors in the area primarily mine their crypto or hodl assets, protecting themselves from inflation and avoiding speculative trading. Dehqan went on, adding, “The sanctions don’t have much effect on mining bitcoin. It’s actually profitable in Iran, compared to other countries.”
This year, Areatak has been the recipient of over 1,000 colocation mining contracts, taking advantage of the cheap electricity with a new infrastructure and charging miners for their earnings. Right now, Dehqan believes that cryptocurrency is just 25% of the typical cost for electricity, adding up to less than a penny per kilowatt hour.
Eskandari, who mines both Bitcoin and Ethereum, said, “Many people from other cities come to Tehran to buy mining devices. My friend sells Antminers and mining devices in Tehran. He sold about 100 devices in the past month.”
Based on the most recent news reports in Iran, regulators are trying to create a legal system that can keep track of this growing mining industry. Dehqan noted, “We have a lot of investors that have visited Iran since the World Mining Summit. All and all, you can actually access buying cryptocurrency in Iran and that’s the only thing that matters.”
So far, Binance has made no additional statements about their advice to customers or the present circumstances.