Iran Cracks Down on Crypto Exchanges as BTC Buying Trend Catches On

To combat capital flight from Iran, the country's government is allegedly blocking internet access to known foreign cryptocurrency exchanges.

Iran has seen a significant rise in capital flight from locals who wish to exchange their rials for Bitcoin. The country has been hit hard by sanctions re-imposed by the Trump administration in the United States. To staunch the flow of rial, the government of Iran is allegedly blocking access to foreign exchanges at the ISP level.

“Every crypto exchange in Iran [has been] filtered since May,” said an anonymous Bitcoin advocate in the country.

At the beginning of that month, we discovered that $2.5 billion has poured out of Iran’s economy for Bitcoin purchases due to the hyperinflation of the rial. This revelation came from Mohammad Reza Pourebrahimi, the chairman of the parliamentary economic commission, who had concerns about the outflow of currency from Iran.

Together with his statement to the Ibena newspaper, Pourebrahimi also spoke about work on a national cryptocurrency, perhaps to bypass the sanctions that have been reinstated since US President Donald Trump reversed an Obama-era deal that Iran and the United States had with regard to Iran’s nuclear energy development.

Trump’s moves led to a sharp decline in demand for the Iranian rial, and launched the currency toward its current annual inflation rate of 127%. The populace reacted to this by quickly offloading what rial they had to purchase any stable asset they could access.

While BTC is by no means stable, it has a better track record than the currencies of many politically unstable countries.

We spotted a similar trend in Venezuela towards the end of May, when one Satoshi (0.00000001 BTC) started to approach six bolivars. The impressive degree of inflation in the country prompted sites like localbitcoins to see volumes of over 3,870,000,000,000 bolivars.

Iran’s censorship of exchanges is likely to yield similar results, as the population finds new, more “underground” ways of making these purchases.