Iran bans cryptocurrencies as Rial hits all-time low

Iran bans cryptocurrencies as Rial hits all-time low

Tehran moves to control currency market in ‘all monetary and financial centers of the country’ in an apparent attempt to prevent money laundering and black market exchanges

Illustrative image of bitcoins (Courtesy BitsofGold)
Illustrative image of bitcoins (Courtesy BitsofGold)

TEHRAN, Iran (AP) — Iran’s Central Bank has officially banned the use of cryptocurrencies in financial transactions in order to prevent money laundering and black market exchanges in the country, an Iranian newspaper reported Monday.

The move is seen as part of Tehran’s efforts to control the currency market after the rial hit an all-time low earlier this month.

The Donya-e Eqtesad daily says the ban applies to “all monetary and financial centers of the country,” including banks, financial institutions and currency exchange offices.

Though cryptocurrencies, such as bitcoin, have never been authorized in Iran, they were available in parallel markets.

Iranian and US banknotes on display at a currency exchange shop in downtown Tehran, Iran, April 4, 2015. (Vahid Salemi/AP)

Cryptocurrencies are created and exchanged independent of banks or governments. Transactions are typically anonymous, but the currency can be converted into cash when deposited into accounts at prices set in online trading.

Only a small handful of countries ban cryptocurrencies outright, but there are several large countries with existing laws or regulations that may make bitcoin holding and trading a legal gray area.

The largest economy that bans bitcoin and other currencies outright is the South Asian country of Bangladesh. Bolivia and Ecuador ban citizens from holding cryptocurrencies, but trading in those countries still happens because of lax enforcement. The former Soviet state of Kyrgyzstan also bans the currencies.

Digital currencies in several other countries are tightly regulated. The Russian government has taken efforts in the last year to put tighter regulations around their usage and trading. In China, there are tight regulations on exchanges and the proliferation of initial currency offerings, also known as ICOs.

View of the Bitcoin Change center on Dizengoff Street in Tel Aviv, showcasing a museum describing the history of the cryptocurrency as well as hosting a Bitcoin ATM and a meeting place for cryptocurrency community meetups. November 05, 2017. (Miriam Alster/FLASH90)

Last month, the Israel Securities Authority announced that it would exclude cryptocurrency companies from indices of the Tel Aviv Stock Exchange but not from the bourse itself, and a much-anticipated decision on how to regulate cryptocurrencies in Israel is set to be published in the coming weeks.

In October of 2017, Israel passed a law outlawing binary options, a large-scale, decade-long fraud industry that stole billions of dollars a year from victims in Israel and abroad. In the absence of prosecutions by Israeli law enforcement, thousands of Israeli binary options operatives have been looking for new work, and the cryptocurrency field, with its lack of regulation, potential for easy money and libertarian ethos, is a magnet for such individuals.

While the Central Bureau of Statistics does not compile data on the fraud sector of Israel’s economy, experts estimate that there are more than 100 fraudulent forex, CFDs, cryptocurrency, insurance, locksmith and Green Card lottery boiler rooms in the country.

Times of Israel staff contributed to this report.

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