- September 19, 2019
- Posted by: Giorgi
- Category: News
Cryptocurrency mining has been officially recognized as a legitimate industry within Iran’s borders. After the controversy of revoked crypto mining gear and the outburst of several ministers against the activity, the announcement of legalization did indeed raise some eyebrows in the crypto community. According to a report from Iran’s Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) the motion has been approved by Iran’s Economic Commission and is now waiting for a hearing in the parliament to be fully approved.
The implementation of the crypto mining industry within the legal framework was also approved by the governor of the Central Bank of Iran, Abdolnaser Hemmati, but emphasized the fact that ministers still need to make a conclusive vote on the motion.
Iran’s economy is being squeezed
The Iranian economy is being seriously squeezed by sanctions from the United States ultimately forcing the country to look for alternative income from various industries. The oil routes that go through the country are already under serious pressure as the US has already sanctioned yet another company for buying Iranian Oil. Much like the Russian market is heavily dependant on its energy industry, Iran also relies on the performance of its oil reserves and export. According to experts from ValutniBazar.ru, due to this dependence, both the rial and the rubble are very responsive to oil prices and large oil company performance in the country. Having something as enticing as a legalized crypto mining industry is a step forward from the Iranian government to diversify the local economy as much as possible.
Crypto trading is still illegal
Despite the fact that crypto mining is becoming widely accepted in the country, the authorities are still not touching the trading aspect of digital assets. It’s unclear why the local government is so aversive towards their citizens using cryptocurrencies when they themselves have approved national gold-backed crypto. But, due to the legalization of mining in Iran, it’s obvious that trading is next on the list. Having so many miners produce vast amounts of cryptos and simply retaining it in reserve is not exactly what economic diversity should look like.
Iran would have the capability to become a large hub for crypto exchanges with their own reserves, hence providing increased liquidity compared to others. And since the popularity of blockchain is increasing in Middle Eastern countries like the UAE, Saudi Arabia, and Qatar it’s in Iran’s interest to be a dominant force. The interest comes from tense political relations between the Shia and Sunni Muslims that has been going on for centuries. Having its population use UAE or Saudi services is a big no-no for the Iranian government.
Will the motion be approved?
As of right now, most of the Iranian ministers are on board with the legal framework, the only topic for discussion will be the energy payments that crypto miners will have to pay. As it stands right now, the miners are using the country’s policy of subsidizing energy consumption for its citizens, which has been criticized multiple times by the Minister of Energy. It’s likely that the crypto mining industry will be taken out of the list of qualified entities for the subsidies, not because it’s “unfair”, but because it’s expensive.
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