New Iranian Legislation to Fund Its Imports by Bitcoin
With the U.S.’s withdrawal from the nuclear deal with Iran in May 2018, reinstating economic sanctions, the economy of Iran faced an ongoing recession. The country’s national currency, the Rial lost close to half of its value against the U.S. dollar. Many Iranians now look at Bitcoin and other Cryptocurrencies as safe heaven against the U.S sanctions and hedge against inflation. Some provinces in Iran accept cryptocurrency as payment. Bitcoin payments are famous among some Iranian students living in other countries for their tuition fees.
The Iranian government has now decided to turn towards Cryptocurrencies to fund their imports as a solution for U.S. Sanctions. The Islamic Republic has become one of the pioneering countries to adopt Bitcoin at a state level for the exchange of value.
Changed Iranian Cryptocurrency Law
The Iranian cabinet recently changed legislation in order to redirect the cryptocurrencies towards the Central Bank of Iran’s funding mechanisms for imports.
“The miners are supposed to supply the original cryptocurrency directly and within the authorized limit to the channels introduced by the CBI,” said a report by CBI and the Ministry of Energy.
Presstv, an Iranian state-owned news and documentary network affiliated with the IRIB, explained: “The legal cap for the amount of cryptocurrency for each miner would be determined by the level of the subsidized energy used for mining and based on instructions published by the Ministry of the Energy.”
“The new law is vague and ambiguous,” says the cryptocurrency analyst Alireza Shamkhi to ISNA news agency. For instance, the central bank does not state how it will assess and nominate prices for cryptocurrencies or what exchange rates will be used. This will reduce the attractiveness of the mining industry and also the profit margins of miners.
The country has issued more than a thousand licenses to crypto miners recently. Iranian power plants are allowed to mine cryptocurrencies. Bitcoin miners are given special access to mining crypto using power generated from three of those said plants. Furthermore, more than a thousand illegal bitcoin miners in Iran has been given the red light towards mining crypto hereafter.
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