In an attempt to halt a currency crisis, and over concerns related to money-laundering, the Central Bank of Iran has banned the banks of the country from dealing in virtual currencies such as Bitcoin.
The Central Bank of Iran (CBI) has moved to prohibit banks from taking transactions which enable the buying, selling, or the promoting of virtual currencies. The bank’s move was reported on Sunday by the Islamic Republic News Agency (IRNA).
As reflected by Reuters:
Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them.
An Informed Decision?
The cryptocurrency ban in Iran comes at times of far wider reforms. The country moved to unify its official and open market exchange rates. The reform was taken in an attempt to slow down the plummeting fiat currency of Iran – the rial, which saw its all-time low earlier this month.
Yet, the circular reported by the IRNA mentioned above does lay out some questionable motives for the cryptocurrency ban, which raises a few eyebrows. The notice reads:
Bit Coin does not abide by any governing rules and regulations in any countries and no government or bank round the globe monitor or supervises it.
While it’s true that there are countries where cryptocurrencies, including Bitcoin, are far from being regulated, there are also those which have already moved to put the virtual currency in certain legislative frameworks.
The US, for instance, treats cryptocurrency as property and taxes it as such. India’s RBI moved to ban cryptocurrencies but the legality of its decision is already being questioned in court and notices have been officially issued.
Fear of Money Laundering
It does seem like this is the main point behind all legislative bodies moving forth with halting cryptocurrencies. Iran doesn’t make an exception:
Virtual currencies have the option to be used for money laundering, supporting terrorism, and exchange of sums between wrongdoers, pointed out the CBI circulation.
The CBI’s Supreme Committee is also heading the fight against capital flight and money laundering in the country. It’s true that cryptocurrencies have been used for purposes of the kind but denying their distinct advantages does seem a bit premature, to say the least.
What is more, the hard facts are that funds linked to illicit activities have historically accounted for a tiny 0.61% of money entering cryptocurrency trading as well as conversion platforms. Also, Bitcoin transactions associated with money-laundering actually declined almost tenfold from 1.07% back in 2013 to 0.12% in 2016.
If anything, this looks like a move stemming out of the regulator’s inability to craft the necessary preventive legislation to halt crypto-related money-laundering activities.
Do you think Iran’s move to ban cryptocurrencies is justified? Please let us know in the comments below!
Images courtesy of ShutterstockShow comments