When Crypto Is The Only Option

LeoFinance
3 Min Read
599 Words

It is interesting how certain countries are setting up their priorities and how they determine priorities. China is working on taking over and totally controlling everything by introducing the digital currency, other countries are banning crypto altogether, liquidating exchanges and blocking bank accounts.

The Islamic Republic of Iran is a Western Asia country of which government's budget came from oil and natural gas revenues (45%) and taxes and fees (31%) in 2006. This is all nice and maybe it would be sustainable too in an ideal world but life in Iran is far from ideal. The embargo on crude oil and economic sanctions has put the country in a very difficult position, forcing the country to take action and use the only available option out there.

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The problem is Iran got banned the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and repatriating funds obtained from selling energy and gas is impossible. International bank transactions are processed by SWIFT and the EU Council decided to ban Iran in 2012.

According to a report from the English-language Iranian economic news source Financial Tribune, the Central Bank of Iran, or CBI, is authorizing banks and licensed forex shops to use cryptocurrency as payments for imports.

Under its regulatory framework, the cryptocurrency must derive from licensed crypto miners only. These mining operations are officially permitted by the Iranian state as an industrial activity and require operators to secure a license from the Ministry of Industry, Mine and Trade. source

So Iran is authorizing banks and lincensed forex shops to accept crypto as payments for imports, but the crypto must come from licensed crypto miners. I see a certain level of bureaucracy here as crypto mining licenses are issued by the government and prefeential treatment is possible, but that's their internal problem, my main point is another.

Sajed Nikpour, a member of the ICCIMA commission for promoting non-oil exports, is cited as saying that the private sector believes cryptocurrency’s usefulness for the Iranian economy applies to the trade sector and could facilitate a boost to domestic production by enabling imports of raw materials. Nikpour has stressed the need to keep such measures transparent. As reported back in September 2020, private sector representatives have also been appealing to CBI to approve the use of Bitcoin to pay for car imports on Kish Island. source

Iran is not the only country hit by sanctions. Venezuela has legalized mining in 2020. Miners must apply for a license and be listed on a government register.

Applicants will need to hand over information to the authorities on the nature of their mining activities and keep their mining-related records for 10 years. Unusually, all mining activities must be carried out through an official National Digital Mining Pool, with those who operate outside it to face penalties. Centralizing mining in this way will mean the government is able to control any income earned from the pool's combined mining rewards, as well as paying out to contributors.source

I'm not going to argue why the embargo and the international sanctions or who's right and who's wrong. That is not the purpose of my post.

The good news in this is that in these countries crypto adoption is happening. The bad news is that is highly centralized and controlled, but maybe in time this will change.

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