Iran’s Crypto Community Finds 51 Problems In Draft Regulations
It’s no secret that Iran considers the use of a national digital currency as a potential tool that will help it evade the U.S.-led sanctions re-imposed last year. But the big question has been its regulatory approach, given it earlier stance against cryptocurrencies.
Earlier this year, following months of pressure, the Central Bank of Iran (CBI) released a draft framework regarding the country’s crypto regulations and asked for feedback.
Problems with the draft
Although some within Iran view the draft framework as a step in the right direction, many have reservations about certain specifics. The feeling is that the framework, in its current form, has the potential to severely limit the public and businesses within the crypto space.
As noted, there is the proposal to ban the use of crypto for domestic payments, despite the lifting of last year’s blanket ban on crypto’s and the recognition of crypto mining as an industry.
Then there is the requirement that cryptocurrency exchanges must obtain permits to operate within the country- a scenario that opens up another rent-seeking avenue. Notably, also, the draft has extensively used the term “forbidden,” which may mean that participants could face criminal prosecution.
The prospect of a getting into a tight corner as per the regulations has thus seen the local crypto community join forces to seek ways of improving the policy draft. The community has reportedly submitted a proposal to the central bank, identifying 51 problems.
The sanctions factor
Iran’s rial has hit multiple new lows since the U.S. re-imposed sanctions against the country in 2018.
In April of last year, Tehran “unified” Iran’s dual (official and open market) foreign exchange rates as it looked to bolster the national currency amid sharp declines. In an attempt to stop further capital drain, the central bank imposed a ban on cryptocurrencies.
Arrests and even executions have been reported following the re-imposition of the bans, mainly for currency traders. One alleged financial offender called the “Sultan of Coins” was reportedly executed for hoarding gold coins.
That aside, Iranian authorities have actually pointed out that cryptocurrencies could be critical in any effort geared towards challenging the manifold restrictions that accompany the sanctions.
The central bank is working on a sovereign rial-backed digital currency, while several top banks recently launched a gold-backed crypto asset. Even Iran’s president Hassan Rouhani is said to have attended several high-level meetings regarding the country’s crypto space.
So many entities
There are around 28 entities that want to have a major say in the eventual regulatory policy for the cryptocurrency industry.
Other than the central bank, some of the other major players include Iran’s parliament, the Securities and Exchange Organization, the Ministry of ICT, the High Council of Cyberspace, the Ministry of Industry, the Ministry of Mining and Trade, and the Ministry of Energy among many others.
Note that all these entities have their own views regarding whether or not crypto needs to be regulated. It presents a kind of complex problem that must be surmounted if things have to move forward.
While this is so, there have also been reports that the final word could rest with Iran’s cabinet.
But according to Saeed Khoshbakht, the CEO of DLT firm Areatak, the Iranian crypto community would do well if it lobbied “positively.” This includes supporting constructive regulations, as well as improving the sector to alleviate concerns raised by regulators and the judiciary.
Khoshbakht noted that the central bank remains Iran’s best shot at the quest for crypto regulations and that any other route would be tougher for cryptocurrencies.
Although the proposed regulations authorize things like coin issuance, crypto wallets, cryptocurrency exchanges, and mining, it is still not that easy given the many problems that the crypto community wants to be addressed.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.