Cryptocurrency surges in Iran to circumvent US sanctions

Tehran, Oct 3 (SocialNews.XYZ) Interest in digital currencies has skyrocketed in Iran despite the obstacles the government has placed on the sector amid international sanctions and a deep economic crisis.

The surge in "mining farms" in Iran, as well as a growing interest in digital transactions that do not require intermediaries, has forced the government to reverse its two-year veto on cryptocurrency transactions, according to Efe news.

"It is a growing field in Iran and, although we don't have exact figures, there are thousands of people working in mining, commerce and research," Hamed Salehi, an activist and director of a cryptocurrency research institute, told the news agency.

Salehi said that "freelancers are the ones who are getting the most out of it", mainly those who work abroad and find loopholes to the US imposed sanctions by making economic transactions using cryptocurrencies.

The US sanctions on Iran have escalated in 2018 after President Donald Trump withdrew from the 2015 nuclear agreement in May 2018, and include various sectors, including energy, shipping and shipbuilding and financial.

The activist said that preventing crypto-exchanges was futile. The sector is now firmly established and is propped up by robust communities, so for the Iranian government to have lifted the ban on digital currencies was "a positive step forward".

The bill ratified by the government does not recognize cryptocurrencies as a legal tender and the Central Bank does not guarantee its value, but the new law allows mining although it has established certain limits.

Miners, users who clump digital transactions to a public record known as a blockchain and make sure that transactions are accurate, must be approved by the Ministry of Industry, Mine and Trade and develop their activities at a certain distance from the provincial capitals, the report said.

Further regulations include higher special rates for the energy the mining farms expend.

These measures came shortly after information came to light that mining farms were multiplying throughout the country in places where subsidized electricity was offered, which in Iran comes at a low cost.

Cryptocurrency transactions like Bitcoin consume an enormous amount of electricity because, to guarantee security, all users of the system have to be involved in the verification process of transactions.

Salehi said that these changes will take "some time", but he hoped that the authorities will soon issue regulations and that the machines can be legally imported to avoid being confiscated in customs.

The relaxed rules meant Salehi and other activists could create the Iran Rescue Bit fundraising campaign using Bitcoin, Ethereum and Litecoin, in which anonymous donors supported tens of thousands of victims affected by the heavy floods that ravaged Iran this year.

All donations will be given to the Red Crescent of Iran to administer although the charity's accounts have been targeted by US sanctions which has made it difficult to coordinate funds for humanitarian issues in the country.

But the capacity of cryptocurrency to circumvent sanctions does have limitations.

Source: IANS