Iran’s vice president in charge of legal affairs says Iran has not banned cryptocurrency exchanges

Iran’s vice president in charge of legal affairs stated that current regulations do not prohibit digital currency exchange. According to local media reports, the department has stated its position in a communication with the ICT industry association, which wants to know which rules apply to cryptocurrency transactions.

Trading cryptocurrency as another does not violate Iranian law

In response to an inquiry from the Iran Information and Communication Technology Association, the vice president in charge of legal affairs stated that the regulations approved by the Tehran government in 2019 did not prohibit the exchange of cryptocurrencies. According to a report in the English-language business daily “Financial Tribune”, the association has requested clarification of applicable encryption rules.

In a letter to the ICT Guild, the legal department under the Office of the President of Iran stated that the law stipulates that cryptocurrency cannot be used for domestic payments. It noted that the current rules are in line with the country’s currency and banking legislation, and concluded that:

“It is not illegal to convert one cryptocurrency into another digital currency.”

Legal experts also emphasized that banks and money changers in the Islamic Republic of Iran can use cryptocurrency minted by licensed miners in Iran to pay for imports. Although the Iranian authorities are trying to curb cryptocurrency transactions, the Central Bank of Iran (CBI) authorizes domestic banks and exchanges to use locally mined cryptocurrencies. This move can help Iranian companies circumvent US-led sanctions.

Two years ago, Iran recognized cryptocurrency mining as a legal industrial activity and authorized dozens of entities to use the country’s cheap energy to mine digital currency. However, this year’s unusually hot summer has increased the demand for electricity, and the country’s power shortages and blackouts are partly due to mining. The government tracked down illegal miners and said it would close even licensed businesses during peak consumption hours.

With the increasing popularity of digital currencies, there are growing calls for proper regulation of the encryption industry. In early July, legislators proposed legislation aimed at rectifying the industry. Although the draft law actually prohibits cryptocurrency payments in the Islamic Republic, it aims to support mining and regulate the cryptocurrency exchange market. In June, then President Hassan Rouhani insisted that the government should implement “necessary laws and instructions” as soon as possible.

On June 18, the Iranians elected Ebrahim Raisi as the new president, who took office on August 3. In the Islamic Republic, the president serves as the head of government, and the current president can appoint a vice president to lead the presidential powers of departments and organizations participating in the exercise. Under Rouhani’s leadership, Iran has more than a dozen vice presidents, including a Raya Jonidi who is in charge of legal affairs.

 

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