Central Bank of Iran approves import payments in Crypto

05/03/2021

The Central Bank of Iran (CBI) will allow banks, currency exchanges, and licensed miners to pay for imports using cryptocurrencies. The CBI has issued a notification to banks and licensed exchanges about the new regulatory framework for crypto payments. The government will soon pass a bill to clarify the regulatory whether in the country.

Avoiding U.S. Sanctions

The tension between the U.S. and Iran has escalated through the years, especially quite recently under the Trump administration, fallout of which has somewhat crippled Iran’s economy, heavily depending on international trades like gas and electricity.

Iran had been mulling a switch to cryptocurrency payments for a while and made a key regulation last October. The amendment enabled the Central Bank of Iran to pay for imports using bitcoins from regulated miners. Under the amendment, licensed crypto miners were required to sell their coins directly to the apex bank. The proposal was part of a joint initiative from the CBI and Ministry of Energy.

Shahab Javanmardi, a member of the Iran Chamber of Commerce Industries Mining and Agriculture, advocated for the government to use cryptocurrency to help counter trade difficulties:

“Repatriating revenue from exporting gas and electricity is not possible under the present [U.S. sanctions]. The government can promote use of excess electricity output or power generated by small-scale plants to mine cryptocurrencies and make up for the locked resources.”

A Crypto Mining Hub

Iran is regarded as a major hub for crypto miners due to the relatively cheap electricity within the Asian nation. As one of the largest oil producers in the world, and generates electricity that exceeds the local demand, which is sold to crypto miners to power their mining farms.

Crypto mining is legal in Iran, but every miner needs a license from the Ministry of Industry, Mine, and Trade to operate legally. Licensed miners must sell mined BTC to Iran’s Central bank through the provided channels by the entity.

Iran’s history with cryptocurrencies was turbulent at first, and mining crypto was illegal until 2019. After reporting several blackouts across the country, local authorities seized 45,000 BTC mining rigs in January this year, blaming crypto farms for their "intensive electricity use."

Crypto in Countries with Hyperinflation

Iran is not the first country to use crypto as an alternative to avoid U.S. sanctions although. Venezuela is one of the most active countries in this regard. Venezuelans usually trade BTC through LocalBitcoin —a P2P marketplace where buyers and sellers offer rates and payment methods.

Cryptocurrencies and stablecoins are also becoming an alternative for many savers and investors in Argentina, which is now experiencing a severe financial crisis. Like Venezuelans, Argentinians are now flocking to crypto exchanges and P2P marketplaces to buy and sell crypto assets and to protect themselves from currency inflation.

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