Iran is taking giant strides on the way to becoming a crypto-friendly state, and recent developments have shown just how far along they are.
While many in the country have been flirting with the idea of developing a state-backed crypto-asset for some time now, Tehran made the decision to legalize cryptocurrency mining last week. On Monday, the Mehr News Agency, a news medium owned by the Islamic Ideology Dissemination Organization (IIDO), reported that the government made this decision after a closed Cabinet meeting that was headed by President Hassan Rouhani.
The news of such an approval first surfaced earlier this month, when Abdolnaser Hemmati, the governor of the Central Bank of Iran, hinted that the idea had already been approved by the Economic Commission. In his statement, he claimed that the Commission believes the “Cryptocurrency industry should be recognized as an official industry in Iran to let the country take advantage of its tax and customs revenues.”
According to the Central bank chief, all that remained was a favorable ruling at the Cabinet meeting, and it would be made official. Thus, here we are.
A long time coming
Even without the legalization of mining, Iran has always been a haven for cryptocurrency miners. While Bitcoin trading and other crypto activities seem to have stalled, mining has flourished, and the country has seen a significant influx of miners.
The reason behind this has been the country’s affordable electricity rates. Data from Global Petrol Prices has revealed that Iran charges almost half a cent for electricity consumption per kilowatt per hour. With rates like these, miners will troop in en masse.
However, now that mining has been officially classified as an industrial activity, the market will get some form of structure. Amongst other things, the report highlights that all current and potential entities engaged in the activity will need to get a license from the Ministry of Industry, Mine, and Trade.
Crypto use is still illegal
However, there remains a significant caveat as using Bitcoin and other assets are still theoretically banned from the internal market. In addition to that, the report clarifies that neither Iran’s commercial banks nor its government will be responsible for cryptocurrency mining or take on its associated risks. So, if you mine Bitcoin and the price of the asset collapses, you’re pretty much on your own.
Prospects of a state-backed asset
As regards cryptocurrency regulations themselves, things also remain a tad murky. As stated earlier, Iran has been flirting with the idea of a state-backed digital asset, especially given the severity of the sanctions that Washington has imposed on it.
Venezuela, another sanctions-hit nation, has already developed a digital asset to help hold its economy steady. However, it would seem that Iran is taking things more cautiously, especially as “the Venezuela experiment” hasn’t been a smashing success. Petro, the latter’s digital asset, has struggled for adoption so far; it isn’t listed on any cryptocurrency exchange, it’s been banned in the United States already, and it only just got its first major endorsement from a department store within the country. Such failure doesn’t provide much of an incentive for Iran to try the same.
#Entérate || Y es que desde este 25 de julio, Traki acepta el #Petro como medio de pago para adquirir los productos y artículos que expenden en su establecimiento comercial.#PetroPago #PetroApp #JuntosLoHicimosPosible #ElPetroExiste pic.twitter.com/pgoeEBH5sg
— Superintendencia Nacional de Criptoactivos (@SunacripVe) July 25, 2019
For now, however, Iranian crypto enthusiasts can bask in this milestone and hope for even more development.