Iranian Bitcoiners Being Hurt By Lack of Clarity in Regulation
Bitcoin and cryptocurrencies walk an interesting line when it comes to legality. In most countries, they haven’t been ruled explicitly illegal and are just not part of the current paradigm of legislation. However, as we’re seeing in both the U.S. and Iran, unclear regulation sets market players up for failure.
The Plight of Iran
The crypto community in Iran is now feeling a crackdown from the government. Iran is already not necessarily known for their free speech laws, so the fact they’ve begun to push against cryptocurrency mining operations isn’t a huge surprise.
In Iran, many of the miners operate using subsidized electricity, and there isn’t a set rate they should be paying for their business operations. As a result, many miners have been getting trouble from the Ministry of Energy. New legislation around formal mining licenses in Iran are currently underway, but in the meantime, miners can fear potential jail time, insanely high fees, or the confiscation of their equipment.
Members of the community estimate that over 80,000 mining devices have been confiscated over the last 4 months. They also say that more than 15 Bitcoin miners have been jailed. One miner went on to discuss how Iran makes miners seem like criminals when they are really just providing a service to the Bitcoin network.
The big issue is that the Ministry of Energy hasn’t debuted their new regulations around Bitcoin and cryptocurrency, so members of the industry don’t necessarily know what they can and can’t do.
The result of these penalties has varied, but according to unverified sources, some Bitcoin miners have had to surrender the deeds to their homes in order to get out of jail, due to the extremely high fine amounts.
These fines are dependent on both the number of machines and the use of subsidized electricity. Fines of $2-5k per machine are multiple of the retail value of the mining rigs, which shows that Iran truly is trying to eradicate rather than regulate. Additionally, Iran generally subsidized electricity for citizens, but has no set category for Bitcoin miners, so the price they are meant to pay isn’t clear. As a result, a farm that spent $5k on electricity could end up getting slapped with a $20k fine that they likely can’t cover.
Back to the Western World
Although not the same as in the United States, the situation is analogous in terms of how unclarity of laws and lack of guidelines hurt market participants. The United States has been very slow to react to the emergence of cryptocurrency and legislation has remained murky at best. Between the unwillingness to approve a Bitcoin ETF and no clarity as to whether certain cryptocurrencies are securities or not, the US is one of the least crypto-friendly places in the world.
When users buy Bitcoin, they are participating in a censorship resistant network and evading traditional financial channels. The ethos of Bitcoin includes free speech as well as the idea of having full control of one’s money. The former is an idea heartily embraced by most of the Western world, but the latter generally allows for sovereignty over money, which goes against other notions in the West.
That is why there is an unclear line being toed by the cryptocurrency world that will need to be resolved sooner than later. In the U.S. they want to control the flow of money, but in Iran, the goal is to control free speech. It will be interesting to see what legislation comes out of these countries and where this legislation will differ.