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Iran Central Bank Bans Domestic Banks from Using Cryptocurrencies

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by Bhushan Akolkar · 3 min read
Iran Central Bank Bans Domestic Banks from Using Cryptocurrencies
Photo: Pixabay

This measure by the Iranian central bank is to control its falling fiat currency ‘Iranian rial’ by limiting the exposure to foreign currencies.

The overall cryptocurrency markets have posted a good recovery over the last seven days with Bitcoin and other altcoins contributing to the upward. However, the shadow of regulatory concerns still continues to loom over and this time its the Central Bank of Iran (CBI) who has banned all banking institutions from offering services and maintaining ties with cryptocurrency firms.

According to Reuters,  the state news agency IRNA reported on Sunday that sighting issues of money laundering, Iran’s central bank has made this decision and aims to prevent or halt any further currency crisis. While quoting a central bank circular on the ban of cryptocurrencies issued by Iran’s anti-money laundering body, IRNA notes: “Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them.”

In the circular, Iran’s central bank has claimed that digital currencies ‘have the option to be used for money laundering, supporting terrorism and exchange of sums between wrongdoers’, revealed IRNA.

This decision to curb the cryptocurrency trading comes as a part of the recently introduced reforms by the Iranian government as it tries to limit the use of foreign currency by its citizens in an attempt to control the fall of its own fiat currency – the Iranian rial. The central bank has also put a limit on the amount of foreign currency an individual can hold in cash to  €10,000 ($12,250).

Amidst the looming fears of some strict financial sanctions led by the United States, the Iranian rial has fallen to an all-time-low this month and so the central bank has introduced the latest ban on money transfers and swaps beyond banks.

Till date, there were no specific regulations involving the trading of digital currencies while the local crypto industry has reported that the trading volumes have been significantly high in the country. In Iran, there have been many international blockchain dealers providing services for past many years and have helped to circumvent the country’s highly restrictive foreign exchange trading environment.

Iran is planning a Venezuela kind of move in order to circumvent the U.S sanctions. The country is said to be working on its own blockchain platform and just like the ‘Petro’, Iran will also be having its own state-owned cryptocurrency.

Earlier this month, the Indian Central Bank also announced a similar ban asking all the registered banks to cut ties with the crypto exchanges. The Deputy Governor of the Reserve Bank of India issued a notice to all banks giving them a time-period of three months to execute this move.

However, there has been a huge backlash by the Indian crypto community and exchanges and much recently a crypto exchange even filed a petition with the Delhi high court against the central bank calling its decision of ban to be “unconstitutional”.

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