Mechanism for using cryptocurrencies in foreign trade finalized

Head of Iran’s Trade Promotion Organization (TPO) has announced the finalization of a mechanism for using cryptocurrencies in foreign trade, Mehr News Agency reported.

Alireza Peyman-Pak made the announcement on his social media on Friday, stating that the mechanism has been finalized in a meeting of the Industry, Mining and Trade Ministry and Central Bank of Iran (CBI) joint foreign currency working group.

The Iranian government approved cryptocurrency mining as an industrial activity in 2020, after which numerous companies started mining cryptocurrency across the country thanks to the extremely low-cost electricity.

In January 2020, the Iranian Ministry of Industry, Mining, and Trade issued more than 1,000 licenses for cryptocurrency mining units.

Iranian government currently allows cryptocurrencies such as Bitcoin to be mined by the mentioned units while requiring them to sell the cryptocurrencies to the CBI.

These cryptocurrencies can be used to pay for imports, thereby reducing the chances of suppliers being punished by the U.S. because of the sanctions imposed on Iran.

However, according to the Ministry of Industry, Mining and Trade, most cryptocurrency mining farms in Iran operate unofficially, generating cryptocurrency worth $660 million a year, or 4-6 percent of the world's total of around $11 billion.

Back in July 2021, members of the Iranian parliament proposed a bill that required the government to ban all cryptocurrency payments in Iran while encouraging the mining of other cryptocurrencies as a source of state income.

The proposed legislation called “Supporting Cryptocurrency Mining and Regulation of Domestic Cryptocurrency Trade,” obliged CBI to regulate cryptocurrency transactions at the national level while calling on crypto-mining farms to declare their assets to CBI.

The legislation authorized the Industry Ministry to supervise cryptocurrency mining in the country.

The ministry would license, supervise and support companies mining international cryptocurrencies aiming at raising $500 million in cryptocurrency for the state in the next Iranian calendar year (starting March 21, 2022) and increase this by 10 percent a year.

Source: Tehran Times