Regulators Alone Cannot Resolve Contentious Cryptocurrency Issues

EghtesadOnline: The Central Bank of Iran is not capable of regulating cryptocurrencies, says the head of the Iran Blockchain Association, calling for creating an independent council to get the job done.

News ID: ۷۸۷۲۴۹

03 November 2021

"We need a special council of representatives from state bodies and private enterprise to craft regulations for cryptocurrencies. The CBI or the Security and Exchange Organization are not qualified [enough] to set rules for cryptos given the multidimensionality of the issue," Abbas Ashtiani told a press conference on Tuesday.

Mining virtual currency is legal in Iran and miners can operate under government rules. Miners are required to acquire a license from the Ministry of Industries and pay their electricity bills based on power export tariffs.

The law does not allow use of crypto for payment inside the country. However, banks and licensed moneychangers can use  digital currency mined by authorized miners in Iran to pay for imports.

The growing interest in mining and crypto trade has prompted authorities to craft a roadmap for the crypto business. But it seems that that does not go far enough.

Experts say the issue is more complex than regulatory challenges. The result has been that no state body wants responsibility or involvement in the crypto industry per se.

The CBI said earlier this year that it was in no hurry to announce new procedures for crypto exchanges. It said it is formulating a plan for the crypto market in collaboration with state institutions.

"The former government had plans for regulating cryptocurrencies, though most of the plans were never put into practice. The Raisi administration seems to have no plan," Ashtiani noted, expressing the Iran Blockchain Association and related societies' preparedness to help make effective rules.

Source of Concern

Government inaction regarding cryptos has become a source of concern, he said. The entire crypto matter is so down below the do-list that "we have still not been able to hold a meeting with the policy and decision makers."

Referring to the government's concerns over the mining and trade of cryptocurrency, Ashtiani said, "We understand policymakers’ concerns and assure them that their reservations can and will be addressed."

He added that "We are ready to help set rules that can help ensure a positive impact of cryptos on the economy while minimizing criminality.

Observers say official concerns about the growth of cryptocurrencies are rooted in the lack of sufficient knowledge and awareness.

Gholamreza Marhaba, a spokesman of the Majlis Economic Commission, warned against taking a restrictive approach, as such measures "only push 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 could enhance the contribution of digital currency to the economy,"

The Ministry of Industries, Mining, and Trade has reportedly stopped accepting new applications for cryptomining following a ban by the prosecutor general. The prosecutor general’s office has also banned the release of hardware seized from unauthorized cryptominers.