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IRAN BANS FINANCIAL INSTITUTIONS FROM USING CRYPTOCURRENCIES

Tehran, Iran - A Shocking Move by Central Bank of Iran

The Central Bank of Iran (CBI) has made a surprising announcement: financial institutions in the country are no longer allowed to use cryptocurrencies such as Bitcoin. This decision comes as a blow to those who viewed virtual currencies as a way to overcome problems related to the banking industry and international sanctions.

Background on Cryptocurrencies in Iran

The CBI’s Information Technology Chief, Nasser Hakimi, had previously reported that the bank was considering adopting a national virtual currency, which could potentially replace the US dollar. However, Iran’s Minister of Information and Communications Technology had announced plans for the country to develop its own virtual currency earlier this year. The move had the backing of Iran’s cyber-security authority, provided that virtual currencies were properly regulated.

Concerns about Cryptocurrencies

Masoud Khatouni, deputy for information technology and communications network at Bank Melli Iran (BMI), believes that cryptocurrencies are shaping the future of banking and should be recognized and widely accepted in the banking system. Despite opposition from some quarters, the CBI has insisted on imposing limits on the use of digital currencies. The bank’s governor, Abdolnasser Hemmati, had warned earlier this year about the risks associated with Bitcoin trade.

Impact on Iran’s Plans

The move is seen as a major setback for Iran’s plans to develop its own virtual currency and could lead to a decline in the use of cryptocurrencies among Iranians. Many experts believe that the lack of regulations will lead to fraud and damage to the country’s banking system.

Iranian lawmakers are set to discuss Bitcoin and other digital currencies next month. The move is seen as an effort to regulate the use of cryptocurrencies in the country and prevent the risks associated with their use.

Key Points:

The Central Bank of Iran has banned financial institutions from using cryptocurrencies such as Bitcoin.
The decision comes as a blow to those who viewed virtual currencies as a way to overcome problems related to the banking industry and international sanctions.
Iran’s Minister of Information and Communications Technology had announced plans for the country to develop its own virtual currency earlier this year.
Masoud Khatouni, deputy for information technology and communications network at Bank Melli Iran (BMI), believes that cryptocurrencies are shaping the future of banking and should be recognized and widely accepted in the banking system.

Author:

Barry Lerner, Legal Research Analyst. Prepared June 2018.