Advertisement

Advertisement

Home regulation

Iran And Crypto's Love-Hate Relationship Has a New Chapter

Iran And Crypto's Love-Hate Relationship Has a New Chapter

The department of Social Affairs in Iran’s Interior Ministry sent a letter to the Fanavaran Blockchain Association, ordering it to stop all its activities over reports of violation. This latest development follows a long line of ups and downs plaguing the Iranian crypto market.

Fanavarian Blockchain Association Undergoing Investigation Over Allegations Of Violation

In the letter addressed to the Blockchain Association, the Social Affairs Department ordered a complete halt of all activities. They also demanded all details pertaining to expenses from its official bank account and financial income invoices. The Association was also ordered to provide detailed activity reports for the last two years especially pertaining to digital currency, including its association with companies in that field. 

The order followed the publication of some reports about the activities of a few cryptocurrency companies in the Fanavaran Blockchain association site that violated the currency outflow laws. 

Iran’s Early Dabbles With Cryptocurrency

In early 2019, Iran legalized and issued regulations on cryptocurrencies, forbidding their use in transactions domestically, but permitting their possession and “mining.” Before Iran banned or regulated cryptocurrencies, it was an ideal place for mining since the government subsidizes domestic electricity. 

To avoid being under-compensated for utilities, Iran initially compromised by requiring bitcoin mining operations to register with the government and pay for energy at the price at which it is exported. By summer 2020, Iran had warmed up to their Bitcoin miners and reduced the electricity tariff of registered mining operations by 47%. 

Study Found Iran Using Crypto To Sidestep US Sanctions

With former US President Donald Trump exiting Tehran's 2015 nuclear deal and reimposing an almost total economic embargo on Iran, including a ban on all imports, including those from the country's oil, banking and shipping sectors, the country had to turn to crypto. According to research data collected by Cambridge Centre for Alternative Finance up to April 2020, around 4.5% of all Bitcoin mining took place in Iran. This allowed the country to earn hundreds of millions of dollars in cryptocurrencies, used to buy imports and lessen the impact of sanctions.

Crypto Mining Ban Blamed On High Energy Consumption

The latest imposed halt on blockchain activities is not the first hurdle faced by the Iranian crypto industry. Last month, Iranian President Hassan Rouhani announced a temporary 4-month ban on all energy-intensive crypto mining activities. With many Bitcoin mining operations setting shop across the country to sidestep US sanctions, these unregulated high-energy operations had reportedly been causing frequent power cuts. 

The Ministry of Energy had previously shut down 1,620 illegal bitcoin mining operations with a capacity of 250 megawatts. However, bitcoin advocates had noted at the time that the country’s blackouts continued even after the authorities had done their sweep. This could indicate that Iran’s energy levels might not be as profoundly depleted by mining operations. Instead, the ban could be a sign of the country’s progression towards stricter crypto regulations. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Tags: 

Advertisement

Advertisement