MPs Say Cryptocurrencies Warrant Support, Space

EghtesadOnline: Lawmakers are trying to steer clear of restrictive measures related to innovative technologies including cryptocurrencies, saying limitations on new technology is no solution.

News ID: ۷۸۷۰۴۶

20 September 2021

"Taking a restrictive approach only pushes innovative solutions underground…This is what has happened in Iran's cryptocurrency market. Our studies show that 50% of crypto activities are in the informal market. This is while supportive regulations can help enhance contribution of the digital currency to the economy," Gholamreza Marhaba, the spokesman of the Majlis Economic Commission told Way2Pay, elaborating on the key commission's recent research into cryptocurrencies.

The cent recommended a new approach to the cryptocurrency industry to be able to use it in improving the economy saddled with decades of sanctions, plunging revenues, misappropriation and mismanagement.

Mining virtual currency is legal in Iran and miners are allowed to operate under rules approved by the government. However, trade in crypto is banned.

Results of the rare study, presented to the chamber last week, say cryptomining has the potential to help solve financial hurdles faced in particular by the energy sector.

"Iran accounts for a considerable portion of global crypto mining. Estimates may not be accurate but we cannot deny that the share is not small and is growing rapidly," the MP added.

He said most concerns about the growth of cryptocurrencies are rooted in lack of sufficient knowledge and awareness.

Lower cost of electricity in Iran, thanks to the subsidies, is among the main objections to legalizing the industry. Hadi Nejad Beigi, MP, says that the Rouhani administration was reluctant to legalize cryptocurrency trade due to the sector's potential in attracting private investment.

As per rules, miners are charged 16,574 rials for one kilowatt-hour and the base rate is halved when household consumption is low and the national grid is not under pressure

"I think there are solutions. We need a mechanism to link the cryptominers and power plant owners," the MP said.

In the Majlis study it was recommended that the government let the miners purchase power through the Iran Energy Exchange, or directly from local and foreign producers.

It also proposes barter deals for the cryptomining industry using subsidized power through which the digital currency can be paid to the government in return for the resources used "at reasonable rates set by the Central Bank of Iran".

Ehsan Arkani, another MP, referred to cryptocurrency potential in helping evade the US economic sanctions. "Cryptos are becoming an inseparable part of the global financial industry. Policymakers need to be aware of this technology so that we can make benefit from it."

He added that by promoting this sector the government could also accelerate the expansion and rehab of power plants.

Energy Ministry data show a jump in electricity consumption in the past several months. Officials have often blamed cryptomining as one main culprit behind the nationwide power shortages, saying that households would face 80% less blackout if the avaricious miners ended their unauthorized business.

Currently 56 cryptomining farms are operating legally using 400 megawatts. The total number of detected illegal centers has reached 5,380 and 216,758 pieces of hardware have been seized.