Iran's Central Bank Bans the Use of Virtual Currencies

Iran's Central Bank announced in a directive that the use of Bitcoin and other virtual currencies is prohibited in all monetary and financial centers in Iran. This directive, published on Sunday, April 21, states that the ban on the use of Bitcoin was approved during the 30th meeting of the Supreme Council for Combating Money Laundering, which took place on December 30, 2017. The Central Bank's public relations office cited the potential of these currencies to become 'tools for money laundering and financing terrorism' and their overall capacity to serve as 'means for the transfer of criminal financial resources' as reasons for the ban. Accordingly, the Central Bank's oversight area has communicated the prohibition of virtual currencies to banks to prevent crimes through these currencies. The Central Bank of Iran has communicated the ban on the use of virtual currencies to 'all branches and affiliated units of banks, credit institutions, and exchange offices,' and these units 'must strictly avoid any buying and selling of the mentioned currencies or any actions that facilitate or promote the mentioned currencies.' The Central Bank emphasized that 'violators will be dealt with according to relevant laws and regulations.' In November 2017, Nasser Hakimi, the Deputy for New Technologies at the Central Bank, stated in a press conference that 'the Central Bank is examining and studying all aspects of Bitcoin, and after a complete review, the Central Bank's policies in this area will be communicated.' This Central Bank official mentioned two major concerns of policymakers regarding the use of 'cryptocurrencies': 'severe fluctuations in the value of cryptocurrencies' and 'the speculative rush to buy, sell, and invest in these currencies, including Bitcoin.' The Deputy for New Technologies at the Central Bank also warned against 'speculative activities' that seek to attract investments in the field of buying and selling digital currencies through 'the formation of network marketing and pyramid schemes.' Bitcoin, the most well-known cryptocurrency among numerous digital currencies worldwide, saw its value rise to over $19,000 in late 2017 but has since fallen to below $9,000, experiencing a decline of over 53% in value over the past four months. In December of last year, U.S. prosecutors charged a woman living in Long Island, New York, with laundering over $85,000 for the Islamic State group, obtained through Bitcoin fraud. Critics of the use of digital currencies point to their involvement in illegal financial transactions. The anonymity of the holders of these currencies and the concealment of transactions from the oversight of banking networks and central banks enable arms traffickers, human traffickers, drug dealers, terrorist groups, and other actors in illegal and underground economic sectors to potentially exploit these currencies. Conversely, advocates of these currencies describe them as a form of resistance by people and civil groups against the monopoly and domination of central banks, predicting that the future of financial transactions will belong to these currencies. In recent weeks, as discussions around filtering the Telegram messaging app have intensified, advocates for filtering this messaging app have cited its potential plan to introduce a digital currency as one of their reasons for stopping Telegram's activities. Reports indicate that Telegram is set to introduce its digital currency named 'Gram.'