Iran to Regulate Crypto market in Bid to Raise More Tax Revenue

Iran has made plans to enhance mining operations over the next few years.

ArzDigital, an Iranian news outlet, has revealed that the national parliament has published a proposal to include cryptocurrencies under existing regulations for currency smuggling and foreign currency.

Should this be approved, it would mean that Iranian crypto exchanges must be licensed by the Central Bank of Iran. They would also have to follow legacy foreign currency exchange guidelines; however, it is not yet clear how existing exchanges would apply for licensing, or adapt existing regulations to blockchain technology.

In addition, the Iranian market is not just composed of homegrown and over-the-counter traders. In contrast to fiat currency exchanges, there are multiple crypto operations serving Iran that are legally based in other countries. The new licensing guidelines have yet to publish further advice on decentralized ecosystems.

For example, the crypto exchange, UTByte, as well as the KingMoney token project, are both registered in Sweden under an umbrella firm called the Sweden Invest Group AB. This is led by a Swedish-Iranian businessman named Reza Khelili Dylami. These projects have been controversial, as some Farsi blogs accuse them of being an “interconnected scam.” It is noted that these were marketed to Iranians for the purpose of conducting cross-border transactions.

“UtByte has received about $13.8 million of BTC and has strong transactional connections to Iranian cryptocurrency services and exchanges.” Chainalysis, a prominent blockchain analysis company, confirms.

These new measures follow the Trump administration voicing its concerns that Iranians may be using cryptocurrency to get around US-imposed sanctions.

Last February, the Parliament of Iran Research Center published a report pointing out that cryptocurrency mining licenses issued in January could be a source of new tax revenue. Another proposal from the same centre stated that the government would be able to gain more than $1 billion in annual revenue from the domestic cryptocurrency mining industry, which is currently estimated to be at $8.5 billion.

Furthermore, the report also recommended that the government set aside a portion of the 2021 budget to cryptocurrency mining. The specifics of this proposal are still unclear at this time.