Iran Set to Make U-turn on Cryptocurrency Ban

Iran is reportedly considering going back on its cryptocurrency ban. This move comes as the government makes definitive steps towards creating a national virtual currency to circumvent U.S. sanctions.

The Central Bank of Iran’s (CBI) deputy for innovative technologies, Nasser Hakimi, has reaffirmed his promise concerning the legalization of cryptocurrencies. At a blockchain and cryptocurrency conference held on August 26 in Tehran, Hakimi said that a new regulatory framework is due in less than a month.

Iran’s Cryptocurrency Ban

Four months ago, on April 22, the CBI announced that all financial institutions in Iran, including banks and credit institutions, were forbidden from dealing with virtual currencies. According to the apex bank, the decision was made during a meeting of the High Council of Anti-Money Laundering on December 30th, 2017.

The Minister of Communications and Information Technology, Javad Azari-Jahromi, admitted that the ban “was an attempt to prevent capital flight” amidst the country’s current economic crisis.

The ban, however, did not succeed in stopping online exchange transactions. Shortly after the ban, online cryptocurrency exchanges temporarily ceased operations for less than two weeks but became active soon after.

On August 1, it was reported that the government of Iran was considering legalizing virtual currency.

National Cryptocurrency Plans

Hakimi also gave additional details regarding Iran’s planned national digital currency. Hakimi has said that the government’s plan requires “suitable and prevalent” backing. He also said that even though previous national digital currencies have been unsuccessful, steps are being taken to make Iran’s case different.

An executive arm of the CBI, the Informatics Services Corporation, announced on July 26 that test transactions on a rial-backed national cryptocurrency have already begun. The complete system will reportedly be shown in three months’ time. An advisor to the ICT Minister has mentioned that the national cryptocurrency will be used to clear limited bank transactions in its first phase.