Iran’s jitters and hopes about Bitcoin

Business Materials 14 November 2017 22:00 (UTC +04:00)

Tehran, Iran, November 14

By Mehdi Sepahvand –- Trend:

The rise of Bitcoin has created many hopes and fears in the Iranian government. While officials think they can use Bitcoin to overcome dollar restrictions, they fear falling into a pitfall the depth of which they cannot fathom.

The Islamic Republic has been under US restrictions over the use of the dollar. As a result, it is cut off from the world banking system, crippling the country’s foreign trade.

Under such circumstances, Bitcoin can offer a great potential, in that it is proof to sanctions. The Iranian government, nonetheless, seems to have a long way before tapping this potential with ease of mind.

Nasser Hakimi, head of New Technologies Department of the Central Bank of Iran (CBI), recently said the CBI is following a strenuous series of measures to bring the use of Bitcoin under control.

He said the CBI is working with various organizations, including the Judiciary Branch, to look into all corners of using the digital currency.

Nevertheless, he cautioned that using Bitcoin can be tricky in that it has been growing in favor with terrorist groups and smuggling bands since transactions on Bitcoin cannot be tracked.

Iran is under special watch by the Financial Action Task Force, a global body that monitors money laundering and terrorist funding, to fix bugs in its banking system so that it does not allow for misuse.

Hakimi said the CBI will ensure that the use of digital currencies would respect global trade compliance rules. “The bank may reach the decision that cryptocurrencies should be exclusively governed by the CBI. In that case, there is the possibility that we issue Bitcoin as notes,” he said.

He also warned against the fact that Bitcoin is volatile in value. “These currencies have a great degree of fluctuation. Over the past few days, their value has had a drastic fall. Such fluctuation makes us pause over whether to use them.”

He said although the CBI could not announce cryptocurrencies illegal, it did strongly prohibit them from buying them. “Bitcoin is not an official currency which is dealt in the official currency system. So if exchange houses deal them, they are in breach of law.”