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Draft Report Suggests Central Bank of Iran May Ban Bitcoin Payments

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On 29 January 2019, CoinDesk, a crypto-focused news site reported that it obtained a draft report revealing that the Central Bank of Iran plans to ban payments which involved “unapproved” cryptocurrencies.

The draft report, when translated, titled “Obligations and Rules Regarding Cryptocurrencies”, and stated that crypto wallets could only be used to hold and transfer digital currencies. The adoption of the use of crypto wallets or cryptocurrencies in all kinds of services were prohibited.

While it is not completely unallowed for users to hold or transfer cryptocurrencies of small amounts, they may be restricted similarly to how Iranians are only allowed to owe a maximum of 10,000 euros apart from their regulated bank accounts.

Additionally, the draft report did not state which digital currencies will ultimately be approved. CoinDesk did report that a source with knowledge shared that regulators would want the Iranian rial to replace all Bitcoin (BTC) transactions. The report further stated that a list of cryptocurrencies allowed to be traded on crypto exchanges will be created and updated every three months.

It was reported that local sources saw the move as a way to protect Iranian rial’s value by the local government. The report also stated that tokens pegged to fiat currencies, valuable metals and commodities are banned from being used to make payments, unless the tokens are pegged to the Iranian rial and issued by the Central Bank of Iran.

According to Al Jazeera, a state-funded broadcaster channel, the ban on these tokens will be announced during the Electronic Banking and Payment Systems conference held in Tehran this week. Additionally, the report, which supposedly is in its first draft and not a final policy in the country, will also be discussed during the conference.

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It is worth noting that the draft reports also declared that local crypto exchanges will have to seek licenses from the government in order to operate legally. However, the report did not clarify exactly how the licences will be able to be obtained nor when the application of the system will begin.

CoinDesk was told by an anonymous Iran entrepreneur that obtaining a license for crypto exchanges will be difficult and argued that the industry might be damaged if the regulations were to be passed through. He also opined that the government did not chose to completely outlaw BTC and allowed its people to hold onto it was a sign that the government recognized the digital currency as an asset.

Another anonymous individual, who reportedly was a Tehran-based cryptocurrency advocate and developer, was shocked by the report stating that BTC transactions will be banned. The developer said that the implementation of the report would be worse for businesses that accepted BTC from customers abroad. This is because businesses would not be able to hold onto their BTC earnings due to the possible BTC restriction in bank accounts. Moreover, there is only limited know-your-customer (KYC) procedures required for foreign customers.

An anonymous miner also told the news site that the implementation of the stated regulations in the draft report would ultimately deter the nature of cryptocurrencies being decentralized.

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