Comments from the Central Bank of Iran’s Deputy for Innovative Technologies Nasser Hakimi indicate that Iran will legalize and regulate crypto activity sometime in September 2018, putting an end to an ineffective ban that started in April.
On 22 April, the Central Bank of Iran declared that all Iranian financial institutions are prohibited from facilitating crypto trading or any other crypto activity. The official explanation for the crypto ban was to prevent money laundering and terrorism but Mohammad Javad Azari-Jahromi, the Minister of Communications and Information Technology, admitted that the ban was to prevent capital outflows amid a worsening hyperinflation situation in Iran. This currency crisis is partially the result of the abrupt ending of the Iran Nuclear Deal, leading to progressively more intense international sanctions.
Crypto exchanges operating in Iran briefly halted trading after the announcement of the ban but within two weeks resumed operations. Additionally, peer-to-peer trading on Localbitcoins and other platforms greatly increased, rendering the ban ineffective. Iranians mostly disregarded it and bought as much crypto as they wanted, especially since it was one of the only safe harbors in the current economic storm.
Cryptocurrency is inherently unstoppable due to its decentralized nature. It is impossible for any government to stop Bitcoin if its citizens really want to use it. Iran reportedly went as far as using sophisticated technology to block crypto-related web traffic even if people were using VPNs. The government may now be realizing the futility of trying to prevent the use of crypto, deciding that legalizing and regulating crypto would allow some control over the market.
The Iranian government has allegedly been developing a national cryptocurrency during the ban. Some see it as a way to possibly circumvent international sanctions, which have prevented the country from using standard international financial infrastructure. Iran is expected to launch an official cryptocurrency backed by its native fiat currency the rial (IRR) before winter.
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