Cryptovoltaic mined in Iran has found a new buyer in the country’s central bank – all in order to keep its economy afloat at least by injecting miners. According to a recent report by the Iranian Students‘ News Agency (ISNA), Iran’s Ministry of Energy has issued an order requiring the country’s officially registered miners to sell the coins they mined directly to the central bank.
The information is surprising, as bankers usually oppose the crypt currency and Bitcoin in particular. However, the coins on the siege mostly rule out the possibility of influencing what is happening in the network that bank employees are so used to. Most often, representatives of the classical financial system mention the volatility of BTC, i.e. the sharp jumps in its rate. Critics of Bitcoin claim that as a result, the coin will never be able to become a commonly accepted settlement system.
The peculiarities of minting are cryptic in Iran
A country whose foreign currency reserves have fallen by more than 33 per cent in the last two years is increasingly seeing Bitcoin as a bypass to reduce US sanctions. This move by the Iranian government is reminiscent of Venezuela’s recent decision to nationalise the mining pools. Venezuela’s economy is also suffering from US sanctions.
Soon after the US withdrew from the multilateral nuclear agreement in 2018, it reintroduced sanctions against Iran, which prohibited groups doing business with the Islamic Republic from cooperating with the US. Secretary of State Michael Pompeo announced new sanctions against 18 Iranian banks on 8 October.
As a result, Iran is unable to freely use the dollars it holds in reserve. According to unconfirmed rumours, Iran’s central bank has almost officially switched its main reserve currency from the US dollar to the Chinese yuan and is considering creating its own digital currency. All this could help Iran sell more of its oil in the world market.
But the recent move by the local government, at least at first glance, is not so much about exports as paying for imports. In his speech to the Council on Foreign Relations last December, Brian Hook, the US Special Representative for Iran, said the following.
The regime is struggling to obtain the foreign currency it needs to purchase imported goods such as equipment, industrial materials and consumer goods.
Iran officially legalised the mining of crypt currency in August 2019, but at the same time banned its trade. The new rules were designed to levy taxes on the miners, which otherwise could have benefited from Iran’s heavily subsidised electricity. Iran has some of the lowest energy prices in the world thanks to its vast oil and natural gas reserves.
But the country is not free to sell these reserves, Decrypt reports. Its economy, which is heavily dependent on oil sales to countries that are afraid of violating US sanctions, was already in deep recession at the beginning of the year. And the coronavirus pandemic has only worsened the situation.
Let us get back to the point – the details of cooperation between the miners and the Central Bank are still being worked out. According to representatives of the state company Presstv, „the miners must supply cryptov currencies directly and within the permitted limit through the channels introduced by the Central Bank“. However, the country has not yet announced the rates at which it will pay compensation to the miners.
We believe the situation has turned out to be quite comical. Still, representatives of the banking system usually criticize Bitcoin Union and other crypt currencies, but here it turned out the opposite. This proves not only the advantages of cryptovalues as a decentralised system that representatives of the authorities cannot control, but also as a convenient tool for circumventing restrictions.
Obviously, after this publication, many citizens of Iran and other countries will pay attention to the BTC. Especially if they have never interacted with the crypt currency before and are unfamiliar with its advantages.
Keep an eye on our cryptography of millionaires. Also look at Yandex Zen for additional materials.