Iran to allow businesses to settle international payments in cryptocurrencies

• Authorities in Iran are reportedly planning how cryptocurrencies can be incorporated into their international trade payment system.
• More stringent rules on digital currencies are expected, as the government struggles to fend off illegal crypto miners.

In a move to support its trading system, Iran is venturing into ways importers and exporters can use cryptocurrencies in their dealings. 

The Central Bank of Iran (CBI) and the Ministry of Trade have reached a consensus to link the bank’s payment infrastructure with a crypto trade system. This will allow payment settlement in digital currencies, according to a Monday report by the Mehr News Agency. An excerpt of the report reads:

All economic actors can use these cryptocurrencies. The trader takes the ruble, the rupee, the dollar, or the euro, which he can use to obtain cryptocurrencies like Bitcoin, which is a form of credit, and can pass it on to the seller or importer. […] Since the cryptocurrency market is done on credit, our economic actors can easily use it and use it wisely.

Iran formalizing crypto payments in international trades

The new payment mechanism will be finalized “within the next two weeks,” says Alireza Peyman-Pak, Iran’s deputy minister of Industry, Mine and Trade, and also the country’s chief of its Trade Promotion Organization (TPO). Peyman-Pak reportedly said;

We are finalizing a mechanism for operations of the system. This should provide new opportunities for importers and exporters to use cryptocurrencies in their international deals,” 

Additionally, he urged the government to give attention to the economic and business opportunities brought on by the crypto industry. Here, he mentioned major cryptocurrencies such as Bitcoin.

Regulation and power outages

The middle east country has had several uncertainties with regard to its crypto industry. Late last year, one of the nation’s major blockchain organizations expressed concerns about upcoming tighter crypto regulations. Additionally, its Bitcoin mining sector has been going on and off due to excessive power consumption and resultant temperature extremes. Power outages led authorities to impose a three-month ban on crypto mining but this was lifted in October 2021. 

However, crypto mining firms were required to acquire operational licenses from the Ministry of Industries, per a 2019 law. Due to their high energy consumption, crypto miners are required to pay extra tariffs compared to other less energy-consuming activities. 

To escape the extra costs, some mining operations are conducted illegally, feeding on subsidized electricity and regularly overburdening the power grid. A top executive at Tehran Stock Exchange was forced to resign in October after illegal crypto mining operations were uncovered in the business premises. A report reveals that illegal miners consumed $16.5 million in power subsidies, inflicting $1.3 million in damages to the national grid. For this reason, the government of Iran frequently turns off electricity to Bitcoin miners.