Iran looks to cryptos to skirt US import sanctions

The country hopes cryptocurrencies will become widely used in its foreign trade by the end of September

Iran BTC                                 
Iran hopes cryptocurrencies will become widely used in foreign trade by end of September as new framework comes into force - Photo:Shutterstock
                                

The Iranian government has begun to issue licences to cryptocurrency miners under a new regulatory framework approved at the end of August. 

The change in regulatory attitudes occurred in response to substantial sanctions imposed on Iran by the United States. 

Ministers hail new framework

Iran's minister for industry, mines and trade, Reza Fatemi Amin said: “All the issues related to crypto-assets, including how to provide fuel and energy, and how to assign and grant licences, were devised.” 

Earlier, Iran’s deputy trade minister, Alireza Peymanpak, said: “By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries.” 

The new framework is the latest twist in the complex tale of the Iranian government’s attitude to cryptocurrencies. In 2019, Iran’s central bank banned cryptocurrency trading. However, mining was allowed to continue, provided that miners obtained a licence, identified themselves, paid higher tariffs for electricity and sold their crypto directly to the government. 

The energy-intensive nature of cryptocurrency mining prompted the government to occasionally suspend mining activity in the subsequent months, with powering homes given priority. 

Despite approving more than 1,000 licences under the previous framework, the Iranian government this year revealed that it had shut down almost 7,000 illegal mining farms, which accounted for 85% of total crypto mining power usage. 

In anticipation of the final passage of the framework, Iran made its first official import order using cryptocurrency last month, worth $10m (£8.6m). 

In addition to allowing imports to be paid for with cryptocurrencies, under the new system, two licences are required before an entity can begin to mine cryptocurrencies in Iran. An establishment licence establishes an entity as a legal crypto miner, while an operating licence allows it to actually begin mining. 

Iran's bitcoin mining share could jump

With Iran already accounting for just over 4% of global bitcoin mining, its share could rise thanks to the new framework. In this way the country will hope to eat away at US miners, who have capitalised on China’s 2021 crypto ban, and the impact that the war in Ukraine has had on western investment into Russian mining operations in Siberia. 

On Monday, Russia’s deputy prime minister, Alexei Moiseev, suggested that the embattled nation could soon legalise cryptocurrencies for cross-border settlements, in light of the changing geopolitical landscape.

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