Iran Bans Cryptocurrency after Rial Plummets

Cryptocurrencies are banned as Iran’s fiat currency nearly halves in value in nine months.

The Iranian state news agency reports that the country’s central bank banned the use of cryptocurrencies on Sunday. Islamic Republic News Agency, citing the media department of the Central Bank of the Islamic Republic of Iran (CBI), states that the CBI’s governing committee made the decision in an effort to counteract money laundering.

The CBI pointed to the ability to use cryptocurrencies for money laundering, supporting terrorism, and “exchange of sums between wrongdoers”. The lack of government regulation was another point mentioned.

However, the ban on virtual currencies comes as the country’s fiat currency, the Iranian Rial, has plummeted in foreign exchange markets. The rial has plummeted from 36,000 rials per dollar in September to 60,000 to the dollar last week, and the CBI has taken the step of pegging the rail at 42,000 per USD. As a result, exchanges in Tehran and elsewhere are closing or are refusing to sell dollars, and police are patrolling to enforce the peg.

RFERL reports that  Iranians had made a run on the currency due to fears of the reinstatement by President Donald Trump of sanctions by the U.S. government against the backdrop of poor domestic economic performance.

On April 5, we reported that Hassan Firouzabadi, the secretary of Iran's High Council for Cyberspace, announced that the government was considering a ban on Telegram. The social network’s exchange and currency were seen by the government as a tool facilitating the protests the country faced in December 2017.

Iran had previously been cautiously favorable toward cryptocurrencies. In November 2017, we reported that the High Council for Cyberspace had stated that virtual currencies were viewed as beneficial for Iran as long as they were regulated. Mr. Firouzabadi recognized that Bitcoin was already being used in the country, and “even dealing with it in exchange shops.”