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Various economies throughout the world have restricted future growth opportunities due to their small size or undeveloped resources and potential. That is one of the elements motivating people to try new approaches to issue solving and advancement. El Salvador, for example, just became the first country in the world to accept Bitcoin as legal money. Iran was another country that used unusual tactics in order to enhance its chances.
The Possible Reason
Iran was one of the countries sanctioned by the US under the Countering America’s Adversaries Through Sanctions Act (CAATSA). The CAATSA, among other things, prohibits American companies from doing business with sanctioned entities, which has a knock-on effect on Iran’s foreign commerce. With the US dollar being the de facto world currency, Iran embraced cryptocurrencies with open arms. Moreover, at a meeting of his cabinet’s Economic Coordination Board in June, Iranian President Hassan Rouhani said Iran needed to legalize cryptocurrency to preserve and protect national interests .
What are the terms?
The Iranian Parliament is considering enacting a bill to “support cryptocurrency mining and organizing the domestic market for exchanges.” If passed, the legislation would make Iran’s central bank the regulatory authority for the exchange of cryptocurrencies in the country.
Furthermore, all cryptocurrencies might be limited or even outlawed within Iran’s borders, with the exception of the state-issued digital currency, known as a CBDC. Furthermore, the law said that domestic cryptocurrency miners would be regulated by the Ministry of Industry, and miners must be licenced by both the Ministry of Industry and the Energy Ministry in order to operate and/or build up power plants necessary to conduct their operations.
Under the aforementioned Act, approved mining firms with partial or whole ownership of a power plant may apply to the country’s aforementioned authorities to sell off any surplus electricity.
This development followed the news that Iran had suffered a blackout which was partly attributed to the energy drain caused by the cryptocurrency mining operations in the country.
Iran’s move similar to China’s?
Since 2019, Iran had allowed cryptocurrency mining operations as long as guidelines were being followed. However, following the blackout, Iranian President Hassan Rouhani put a stop to the mining activities until September. Since then, several raids to bust “unlicensed miners” have taken place within the country considering its rising need for energy in summer.
This development is being likened to previous events in China, when numerous mining operations were shut down in a short amount of time. The latter’s aim to replace all cryptocurrencies with a CBDC such as the digital yuan is seen similarly.