Iran Gov't Preparing Tougher Rules for Crypto Industry

EghtesadOnline: The government has prepared a new bill to regulate the work of cryptocurrency mining centers.

News ID: ۷۸۷۳۴۹

27 November 2021

Observers, however, say the new bill has failed to address drawbacks and deficiencies in the existing regulations that have reportedly deprived the sector of growth it deserves.

The new bill, according to Way2pay website, bans cryptomining and all related services, including importing, producing, selling and installing mining hardware, except for those with a valid license from the Ministry of Industries, Mining and Trade.

It is supposed to replace rules announced by the former administration in which mining virtual currency was legal and miners were allowed to operate under rules approved by the government.

While cryptomining is legal in Iran, unauthorized farms have cropped up with increasing speed using subsidized electricity because they must pay much higher tariffs if they operate with a permit.

Permission from Iran's National Standard Organization is also obligatory for importing, producing, selling and installing mining equipment, otherwise it is considered as contraband and impounded when found.

Experts stress that the sale of most cryptocurrency mining hardware is legal simply because it also used in other sectors and imported legally by computer and technical hardware companies.

Role of the Energy Ministry

The government has seemingly reinforced the role of the Energy Ministry in regulating the sector. Any license issued by the Industries Ministry must also acceptable to the Ministry of Energy.

The Energy Ministry is the authority that decides whether or not to sell electricity to the applicants okayed by the Industries Ministry, taking into account the national grid’s conditions and capacity.

Cryptominers were often blamed for the chronic power shortage in recent months that fueled frustration across the board despite the fact that the share of legal miners in the total electricity consumption was meager.

As the power situation worsened in summer, the relevant authorities shut illegal cryptomining units to help prevent shortages. An estimated 5,800 illegal mining farms were shut and 221,825 pieces of hardware were seized.

In the new bill, the government has tasked the country's National Security Council, provincial and local security authorities, the police and the related executive departments to collaborate with the energy and oil ministries in detecting and closing illegal mining centers.

The ICT Ministry is specifically tasked to develop an online platform to identify and locate users involved in the mining of cryptocurrencies.

Authorized cryptominers have three options for buying power for. They can build their own renewable power plants or purchase power from newly-established renewable plants. They can take part or invest in energy-efficiency plans and receive incentives. They may buy electricity either through the Energy Exchange.

Full of Restrictions

The government has reportedly provided private sector leaders with a draft of the new bill and called on them to share their views and experience.

The ICT Guild Organization has censured the government for drafting rules that add to the hurdles the cryptocurrency industry is already facing and urged the Raisi administration to put the bill on the back burner.

"The bill is studded with restrictive measures. This is while the sector is highly capable of increasing tax revenue and attract investments in the power generation sector," reads an open letter.

The bill was initially floated by the Energy Ministry under the former government, the letter claims, and is "in the interest of the electricity industry mafia." It was not clear who the mafia is and what connection it could have to the key power industry.

"The ministry wants expanded control and regulation of the cryptocurrency industry," it complained.

Iran Power Generation, Distribution and Transmission Company (Tavanir) has claimed that Illegal cryptomining centers used 3.84 trillion rials ($16.5 million) in subsidized electricity and inflicted 380 billion rials ($1.3 million) in damages to the national grid.

Back in August, officials at the Ministry of Industries denied the claims as “exaggerated” and denied reports about the role of illegal cryptominers in the blackouts.