Iran finalizes mechanism to use cryptocurrencies in foreign trade

The Central Bank of Iran and the Ministry of Industries, Mining and Commerce have reached an agreement to link the CBI crypto platform to the Comprehensive Trading System, which allows companies to use cryptocurrencies to settle payments to international partners.

Alireza Peyman-Pak, head of the Iran Trade Promotion Organization, made the announcement on his social media on Friday, stating that the mechanism was finalized at a meeting of the Ministry of Industry, Mining and Trade and the Central Bank of Iran (CBI ) joint foreign currency working group.

The Iranian government approved cryptocurrency mining as an industrial activity in 2020, after which numerous companies began mining cryptocurrencies across the country thanks to extremely low-cost electricity. It currently allows cryptocurrencies like Bitcoin to be mined by units and requires them to sell cryptocurrencies to the CBI. These cryptocurrencies can be used to pay for imports, reducing the chances that the US will punish suppliers due to sanctions imposed on Iran.

In January 2020, the Ministry of Industry, Mining and Commerce of Iran issued more than 1000 licenses for cryptocurrency mining units.

Proposed legislation called “Supporting Cryptocurrency Mining and Regulating Domestic Cryptocurrency Trading,” forced CBI to regulate cryptocurrency transactions domestically while asking crypto mining farms to declare their assets to CBI.

The legislation authorized the Ministry of Industry to supervise cryptocurrency mining in the country.

The ministry would license, monitor and support international cryptocurrency mining companies with the goal of raising $ 500 million in cryptocurrency for the state in the next Iranian calendar year (as of March 21, 2022) and increase this by 10 annual percent.

“We are finalizing a mechanism for the operation of the system. This should provide new opportunities for importers and exporters to use crypto in their international agreements, ”IBENA said, citing Peyman Pak.

Although Iran appears to recognize the value of cryptocurrencies, it also sees the direct impact on crypto mining. Iran is currently home to 4.6% of the world’s miners. Recently, Iran has banned the mining of bitcoins and cryptocurrencies to save energy, as it requires so much energy that it is said to be putting pressure on power grids. Unlicensed miners account for the majority of crypto mining in Iran and authorities are trying to crack down on any illegal entities. The mining ban will last until March 6 and will help ease pressure on the country’s energy reserves.

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