Iran Blockchain Community Receptive to Central Bank Crypto Stance

EghtesadOnline: The Central Bank of Iran unveiled its draft policy on cryptocurrencies and invited experts and industry players to send their suggestions.

News ID: ۷۴۶۵۹۳

03 February 2019

At the vanguard of the cryptocurrency enthusiasts is  Iran Blockchain Community – an NGO active on the blockchain scene since June 2017.

Since inception IBC has held conferences, such as the BTC Day to mark Bitcoin Day and seminars in  universities, including in the University of Shiraz and University of Isfahan. It also held events in Tehran and other cities to help educate the public on cryptocurrencies.

Last March and when the regulatory atmosphere for cryptocurrencies became tighter, IBC organized the "ReguBlock" conference at which they awarded prizes to the best articles related to blockchain and cryptocurrency regulations, Financial Tribune reported.

Last May the Central Bank of Iran banned foreign currency trade when forex market volatility emerged. The CBI issued a directive, saying that financial institutions regulated by the central bank cannot trade in bitcoin, which it said would be tantamount to money laundering.

After the directive, bitcoin exchanges were singled out and many of their websites were blocked. It was then that IBC started engaging with Vice Presidency for Science and Technology and the Majlis to inform the two institutions that that was not the right approach.

They tried to convince the relevant authorities that given the problems the country is facing in money transfers, there is a dire need to undertake transactions in digital currencies and bypass the US sanctions.

From around September the atmosphere changed for the better and Abolhassan Firouzabadi, secretary of High Council of Cyberspace announced that bitcoin would henceforth be accepted as an industry.

"On the whole I consider CBI policies on cryptocurrency as positive, Sepehr Mohammadi, president of board of directors of IBC told the Financial Tribune.

Based on CBI polices, the bank has upheld its ban on common cryptocurrencies such as bitcoin to be used as payment tools inside the country. Mohammadi says to attract foreign investment the CBI should show more “flexibility" in its approach to the bitcoin ban.

"The fact that the US has proceeded to sanction Iran's national cryptocurrency before it is launched means that the tool has the capacity to bypass sanctions," he said.

Last December US lawmakers introduced a bill to levy further sanctions on the Iranian financial sector and on the development and use of the national cryptocurrency.

According to Iran's Telecoms Minister Mohammad Javad Azari Jahromi, the country has prepared five models for its national cryptocurrency.

"We also consider the creation of a national cryptocurrency on the whole a positive sign and hope that complementary policies and bylaws are soon published and experts' feedback is also used," Mohammadi added.

Soheil Nikzad a member of the board of directors of IBC, says on average $10 million worth of bitcoin transaction take place daily in Iran and could be much more on peak days.

According to Mohammadi, there is the potential for cryptocurrencies to help bypass the US sanctions but say this could be done better if the private sector is allowed to develop its own cryptocurrencies.

Asked if anti-money laundering rules could inhibit Iran's bid to use cryptocurrencies, Mohammadi said they are no worries in this regard because Iran observes AML laws.

"It's the unjust US sanctions that have tied our hands and not AML regulations," he said, adding that AML laws had been in place before for crypto exchanges.

CBI has demanded that exchanges too uphold anti-money laundering rules like KYC for their trade.

Mohammadi says there are about 20-25 blockchain startups with MVP (Minimum Viable Product) in Iran but estimates there are quadruple this figure for all active startups.