A difficult-to-enforce ban may be part of a broader plan to circumvent sanctions.
Iran may be undertaking one of the first instances of digital currency protectionism as part of a larger move to avoid the consequences of sanctions.
According to a tweet from news outlet Iran International, the Central Bank of Iran announced a Cabinet decision on Wednesday mandating that digital currencies exchanged in the country be mined or extracted in the country, prohibiting the exchange of digital assets mined elsewhere.
While many analysts have noted that enforcement would be nearly impossible, blockchain lawyer and advisor Fatemeh Fannizadeh have speculated that the ban may be directed primarily at banks and forex companies that use cryptocurrency to pay for imports:
The Central Bank of Iran ratified regulations in late April to enable banks and other financial institutions to use cryptocurrency to pay for imports. Institutions can use crypto from state-licensed mining operations to make transactions under that system. This new legislation appears to be intended to ensure that only cryptocurrency mined from authorized farms is used for imports.
Since 2019, regulators have granted over a thousand licenses for crypto mining facilities, including a 6,000-rig farm operated by a Turkish company.
The new laws could be part of a broader sanctions policy that has been in the works for years. Since 2018, the Iranian research institute Majlis Research Center has been urging the country to use blockchain to avoid debilitating economic sanctions, writing in one study that digital assets could be leveraged for foreign trade:
“According to experts, one way to avoid the adverse effects of the unjust sanctions is to use cryptocurrencies for foreign trade.”
Despite these latest attempts to establish a state-sanctioned crypto import payments pipeline, Iran’s relationship with digital assets has been rocky at times in recent months. In January, officials blamed widespread power outages on illicit crypto mining operations, but experts said deteriorating and long-ignored infrastructure was more likely to blame.