In a strategic shift from its stance on digital currency, Iran has decided to regulate the crypto industry instead of restricting it.
The decision was announced by the Minister of Economic Affairs and Finance Abdolnaser Hemmati at a national event in Tehran, where he said that they aim to minimize the risks associated with crypto while reaping all its benefits.
The country’s Central Bank will be in charge of managing all the digital assets. From laying down the regulatory framework and helping financial institutions adopt digital assets to monitoring transactions and ensuring compliance, it’s all up to the Central Bank.
It has already published a set of guidelines regarding tax compliance and anti-money laundering measures.
Currently, Iranian investors hold between $30B and $50B worth of crypto assets, roughly one-third of the company’s total gold market.
The Crucial Timing of the Decision
The timing of this decision couldn’t have been better. Hemmati believes that will have several benefits:
- Attract domestic and foreign investors
- Create more job opportunities and drive employment among the youth
- Integrate Iran with the global economy and simplify its access to a much broader range of financial services (those that only allow crypto transactions)
But there’s one major reason that beats everything else – protection from sanctions. As Donald Trump prepares for his second term in the White House, Iran must brace itself.
The first time Trump was president, he withdrew the Iran nuclear deal. One of the reasons he cited was that the deal was one-sided, benefitting mostly Iran and not bringing much of the peace it promised to the other countries.
Note: The Iran Nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), is a landmark agreement between Iran and the superpowers of the world (including the USA) under which Iran promised to dismantle its nuclear program and allow the other countries to closely inspect its nuclear facilities in return for relief from billions of dollars worth of sanctions.
Will the US Impose Sanctions?
With the sanctions back, Iran’s economy took a massive hit, and the country has been struggling ever since. Hence, now that Trump is back, there are rumors that he might revive his so-called ‘maximum pressure policy’ against Iran with more sanctions.
The chances of a revival of this policy seem low. JPMorgan analyst Arun Jayaram states that imposing more sanctions on Iran can severely affect the global oil supply, removing approximately 1 million barrels of oil per day from the supply chain. But you never know with Trump, so Iran has wisely decided to buckle up.
Iran is making other compromises as well. For instance, on Tuesday, the UN declared that Iran has decided to stop producing enriched uranium that it could use to make bombs.
Also, new Iranian President Masoud Pezeshkian had previously said that establishing cordial relations with the West, getting relief from sanctions, and restoring ‘normality’ to Iranians is his primary goal for this term.
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