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Iran is turning more and more to bitcoin as the United States continues to impose economy-weakening sanctions on the nation’s operations.
How Iran Is Looking to Fix Its Financial Mess
To be fair, Iran has been secretly involved in bitcoin for a few years. Things began in 2015 at the start of the Iran Nuclear Deal. It was during this period that the nation’s currency, the rial, fell from about 32,000 for $1 USD to about 120,000 for $1 USD. Thus, many bitcoin miners have since begun the business of extracting new coins and earning a profit by selling or trading these currencies behind closed doors.
Why so secretive? Well, because Iran is still very much against any activity that involves cryptocurrency. While the process of bitcoin mining itself is not necessarily banned, the activity of shipping new mining equipment in and out of the country is until Iran can develop newer (and clearer) regulation. Many bitcoin miners live very hidden and refuse to identify themselves out of fear of being persecuted by their country’s government.
Mohammad Javad Azari Jahromi, Iran’s minister for information and communications technology, explains:
It is clear that [Iran] has turned into a heaven for ‘miners.’ The business of ‘mining’ is not forbidden in law, but the government and the Central Bank have ordered the Customs Bureau to ban the import of mining machines until new regulations are introduced.
For the most part, Jahromi says that Iranians have become more open to cryptocurrencies once the concepts behind them were properly explained. He says:
Some of our top clerics have issued fatwas that say bitcoin is money without a reserve; that it is rejected by Islam and cybercurrencies are haram. When we explain to them this is not a currency but an asset, they change their minds.
Last year, regulators in Iran began monitoring transactions within the region to ensure that none occurred with foreign currencies. This included bitcoin. It is estimated that over $2 billion in bitcoin transactions occurred within the nation’s borders, and legislators say this isn’t helping the rial get any stronger.
In addition, Iran is concerned about the illicit activity that allegedly comes with bitcoin and other digital currencies. Last November, a grand jury in New Jersey accused two Iranian men of hijacking approximately 200 American computer networks for the purpose of extracting bitcoin ransoms.
You’ve Got to Keep Things Safe!
Sigal Mandelker, the Treasury’s undersecretary for terrorism and financial intelligence, has suggested that cryptocurrency exchanges and similar crypto-based businesses need to up the ante when it comes to security and keeping customers’ assets protected. He states:
As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers and other providers of digital currency services harden their networks against these illicit schemes.