The Central Bank of Iran has reportedly banned its citizens from trading bitcoin mined outside of the country in an attempt to stop capital flight.
According to an announcement shared by Iran International, the Central Bank of Iran (CBI) has banned its citizens from trading bitcoin and other cryptocurrencies mined in foreign countries.
Fatemeh Fannizadeh, a Swiss qualified independent lawyer and advisor on blockchain technology and cryptocurrencies, believes this move by the CBI is an attempt to stop capital flight from Iran.
“Crypto is already regulated in Iran … this just means that Iran wants to export Iranian produced coins more aggressively, encourage mining, and counter capital flight in the face of a depreciating Rial,” Fannizadeh shared on Twitter.
The rial, Iran’s fiat currency, has experienced severe depreciation recently, hitting a record low against the dollar in 2020. Therefore, it seems reasonable that the CBI would act with protectionism on its currency and economy from a monetary standpoint.
Interestingly, the move makes it seems as if the CBI is treating bitcoin mining and trading as regular commodity activities. As a result, the central bank is attempting to maximize exports and minimize imports to favor Iran’s balance of trade, which has been suffering since the pandemic broke out.
Bitcoin, and bitcoin mining in particular, hold unique status in Iran compared to any other country on earth. Access to subsidized power would theoretically make it a great location to mine BTC, but local officials have offered mixed regulations that encourage and discourage the practice. Most recently, Iran has attempted to control the bitcoin mining industry, requiring that mining operations be officially sanctioned and then allowing these miners to use the resulting bitcoin to pay for imports. Cryptocurrencies like bitcoin can be powerful tools to help Iran circumvent international economic sanctions.
But such protectionism, like this reported ban, doesn’t seem very enforceable for Bitcoin users. Given that Bitcoin emission is decentralized and uncensorable, it is unclear how the central bank would enforce these restrictions.