Iran’s Central Bank Begins Crackdown on Cryptocurrencies

The issue of cryptocurrency regulation has often been debated by governments, parliaments and financial institutions throughout the world. While some choose positive stances, other governments are less keen to do so. One example is Iran, whose government has decided to begin a crackdown on digital currencies.

To put things better into perspective, local banks are now prohibited to take part in, or process cryptocurrency transactions. The new rules will be enforced by the Central Bank of Iran, which also serves as one of the country’s main financial regulators.

The current financial situation in Iran is negative, given the fact that the country is expecting new US-led sanctions, whereas its national currency has hit a new all-time low. In an effort to increase sustainability of Iran’s national financial systems, the government and central bank have adopted new policies, many of which the public considers negative. With this in mind, a few weeks ago, the Central Bank decided to officially unify all of the open market exchange rates, into a universal one. Additionally, the Central Bank also made open market fiat exchanges illegal, which means that citizens can now only exchange fiat in banks.

Another decision makes it illegal for Iranian citizens to hold over $12,500 in foreign currencies in cash.

 Given the high financial pressure, the Central Bank likely believes that the cryptocurrency market can bring about more financial instability, alongside possible money laundering activity. As part of its notice, the Iranian Central Bank mentioned that: ‘Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them.’

It is important to point out the fact that back in 2012, the global payments rail known as SWIFT, has banned Iran from their network – sanctions were only lifted in 2016 by the US Administration.

Based on everything that has been outlined so far, it is expected that the financial market in Iran will face more pressure, especially since it is likely for the Trump administration to carry on with new economic sanctions.