Iran is tightening its grip on cryptocurrencies as the rial suffers extreme devaluation amid economic chaos. The Central Bank stopped rial use in crypto exchanges, targeting over 10 million users. New regulations aim to oversee crypto trading while addressing currency depreciation but may push people to underground markets, with rising inflation and sanctions complicating the economic landscape.
Iran’s government is intensifying its crackdown on cryptocurrencies as the national currency, the rial, experiences a significant decline amid economic instability. The Central Bank of Iran (CBI) has halted rial payments for crypto purchases, impacting over 10 million users and aiming to mitigate further currency depreciation by limiting exchanges involving foreign currencies.
Despite previous limited measures, the current crackdown appears more extensive, signaling an intent for greater government control over the burgeoning crypto sector. Inflation rates have consistently exceeded 40%, and the economy remains largely unconnected to global payment systems, challenging the financial stability in Iran.
The CBI has claimed authority to oversee the crypto markets, as Governor Mohammad Reza Farzin attended a high-level meeting with government officials. Following the rial payment ban, CBI imposed conditions on exchanges requiring them to provide detailed user information and restricting certain trading activities, particularly in dollar-pegged stablecoin Tether (USDT).
This attempt to regulate the crypto market coincides with the rial’s plunge, hitting record lows against the US dollar. The government is striving to curb the currency slide while simultaneously controlling illegal currency trading amid increasing regional tensions and sanctions.
Some exchanges are adapting by exploring alternate measures for facilitating rial transactions, though criticism has emerged regarding the government’s approach. Local exchange executives express frustrations over the restrictions, highlighting a disconnect between government policies and the realities faced by citizens in Iran’s economically strained context.
Iran’s enhanced regulation of cryptocurrencies aims to stabilize its failing economy and the plummeting rial, but such measures may push citizens towards unauthorized trading avenues. By restricting access to exchanges and monitoring activities, the government intends to control the crypto market while struggling to cope with relentless inflation and international sanctions. Future regulatory frameworks remain uncertain, risking further divergence from potential global financial inclusion.
Original Source: www.aljazeera.com
