Central Bank of Iran Releases Draft Policy on Cryptocurrency

EghtesadOnline: The Central Bank of Iran unveiled a draft of its cryptocurrency policy late on Monday, calling on experts and stakeholders in the area of virtual currencies to comment and send their views on the policy.

News ID: ۷۴۶۵۹۲

30 January 2019

The announcement was to be made last September but was delayed and came just in time for Abdolnaser Hemmati, CBI governor, to include it in his package of good news on Tuesday at the 8th Conference of Electronic Banking and Payment Systems.

While clarifying some main issues shrouded in mystery in the past, the CBI intends to maintain the ban on common cryptocurrencies such as bitcoin to be used as payment tools inside the country.

"The CBI reemphasizes that the spread of cryptocurrencies will have potential ramifications for monetary and foreign exchange polices and by creating new venues will [also] present threats to the general public and organizations that use them," Financial Tribune cited the CBI announcement.

The policy will have to be approved by the Money and Credit Council – a decision-making body led by Hemmati – before it is enforced.

Brigadier General Gholmreza Jalali, head of the Passive Defense Organization – an inter-organization that  monitors potential threats to the country – had said earlier that the organization considers cryptocurrencies an opportunity only if they are developed domestically and used for bypassing the US sanctions.

The CBI addresses four main areas in setting its crypto policy: Initial Coin Offerings (ICO), crypto exchanges, crypto wallets and crypto mining.

Regarding ICO, the CBI said developing crypto wallets for keeping tokens within the legal frameworks would be allowed. From the standpoint of the CBI, tokens could be backed either by gold or other precious metals, the national currency, foreign currencies or other visible or invisible assets.

An Initial Coin Offering (ICO) is the cryptocurrency space's rough equivalent to an IPO in the mainstream investment world. ICOs act as fundraisers of sorts; a company looking to create a new coin, app, or service launches an ICO.

Next, interested investors buy in to the offering, either with fiat currency or with preexisting digital tokens like Ether. In exchange for their support, investors receive a new cryptocurrency token specific to the ICO. This definition of ICO, is also approved by the CBI.

ICOs, the CBI says, will take place through the stock market.

National Cryptocurrency

The bank says that it is the only entity that can issue a national cryptocurrency – plans for which are already underway.

According to the draft rules, the planned national cryptocurrency can only be traded in certified banks inside the country and be used as a payment tool. However, the national cryptocurrency cannot be mined.

Regional Cryptocurrency

The CBI envisions that the creation of a regional cryptocurrency could be devised through a monetary agreement with neighbors and be used as a payment tool.

The CBI has warned that it cannot give guarantees about the authenticity of cryptocurrencies and will create a mechanism for controlling and managing the stability of their prices.

It adds that the risk trade for all cryptocurrencies (like bitcoin) will be on investors themselves and that licenses will be issued for these exchanges after their credibility is approved by the bank. The exchanges are required to uphold anti-money laundering rules like KYC for their trade.

As for mining, the CBI says the phenomenon has been deemed as an "industry" and therefore its regulations are outside the CBI ambit.