Iran Blockchain Association offers help to government on crypto laws

Iran's blockchain association has offered its help in understanding cryptocurrencies and assisting the government in bringing crypto laws.

As the cryptocurrency market has been moving upwards day by day, Iran has shown interest in becoming the hub for the crypto market.

But, due to lack of regulations, it is unable to attract any crypto firms, as successfully done by countries like Singapore, Estonia and Malta.

Iran Blockchain Association (IBA) chief Abbas Ashtiani said that we are ready to help set rules that can help ensure a positive impact of crypto on the economy while minimizing criminality.

IBA is a nonprofit and self-governing community of crypto entrepreneurs, experts, specialists, activists and enthusiasts of blockchain who work to develop this technology.

IBA proposes public-private partnership

Ashtiani said that the Central Bank of Iran (CBI) is not capable of regulating cryptocurrencies, and suggested an establishment of an independent counsel to take on the job.

He said, 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.

Even though crypto trading and crypto payments is banned in Iran, banks and licensed money changers are allowed to use digital currency generated by authorized miners in Iran to pay for imports.

Cryptocurrency mining is the most regulated sector, since Tehran recognized it as a legal industrial activity in 2019.  

For mining operations, companies are required to obtain a license from the Ministry of Industries in order to operate in Iran.

As per an estimate close to 50 entities have already done so, official data showed earlier this year. However, due to low power availability to citizens, the ministry has reportedly stopped accepting new applications following a ban imposed by the Prosecutor General’s office.

Bans crypto mining for four months

Due to low cost of energy, and a complete ban imposed by China, crypto mining was on peak during the first few months of 2021. However, some miners even employed household electricity to power their operations, which later led to issues.

At the end of May, the Iranian government placed a temporary ban on all cryptocurrency mining endeavors citing vast energy consumption as the reason.

After announcing the ban, the authorities started confiscating mining machines and took custody of over 7,000 Bitcoin mining machines from an abandoned factory in the capital city of Tehran. The seizure was marked as the largest ever carried out in the Asian country.

On 22 September 2021, the government lifted the restrictions explaining that it was the end of the summer season and the electricity demand was not that high anymore.

Ashtiani said that IBA was set up for developing blockchain technology in Iran and the establishment of business and scientific relations and also, exchange of experience with other countries and associations.

Development of Blockchain-based applications aimed at synchronizing the country’s programs with global advances and the development of new digital technologies.

Iran’s Crypto Rial 

In 2018, CBI's Informatics Services Corporation has published a report stating that it is developing a national cryptocurrency 'Crypto Rial', which was under the pilot design phase completely backed by the state as a sovereign digital currency. 

Iran's Crypto Rial is based on Hyperledger Fabric platform and will be designed on a private blockchain. However, this is different from other cryptocurrencies such as Bitcoin, which are based on public blockchains. The Islamic State’s digital currency will not be mined.

The Iranian cryptocurrency will be government-issued and, although digital, will not be decentralized but will only be able to be used for small official transactions defined by the CBI.

In order to gain global attention, Iran needs to formulate a law with the help of IBA so that other crypto projects can set up their offices. This will help Iran attain global acceptance and thereby become one of the crypto hubs in the Middle East region.

Jagdish Kumar

Klever Writer

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