This article is part of a series on governments with an anti-crypto stance.
Understanding the cryptocurrency market in Iran
Back in April 2018, the CentralBank of Iran published their decision to prohibit local financial institutionsand banks from getting involved with cryptocurrencies. The reasoning consistedof terrorism financing and money laundering risks. Despite this aspect,numerous studies showcase that while crypto can be used as an effective toolfor carrying out illegal activities, the level at which this is being done isstill fairly low. In fact, no terrorist attack so far was sponsored with thehelp of digital currencies.
As you may already know, Iran hasbeen dealing with economic sanctions imposed by the United States for years.There are some voices who believe that the Iranian government is actually usingdigital currencies, as a means to dodge some of these economic sanctions. Iranis therefore an interesting case study, since the country only banned businessand financial entities from dealing with crypto, whereas citizens are stillfree to purchase, hold and invest crypto.
Based on the latest developments, Iran may become one of the first countries to remove the ban imposed on cryptocurrencies. For instance, back September 2018, the Iranian Cyberspace Council Secretary made a press statement, saying that digital asset mining is now accepted by the country’s authorities.
Developing a CBDC
Last but not least, severalreports mentioning that Iran’s government and national bank are working on acentral bank-backed digital currency have emerged. To put things better intoperspective, this coin would be centralized and thoroughly controlled by theIranian Central Bank. It is believed that its value will be backed by theIranian rial, thus ensuring a viable price from the start. As for the coin’spurpose, if developed, it will be most likely be used for bank transfers,settlements, and other types of government-linked payments.
An explanation of the digital currency marketin Pakistan
Pakistan is well-known for itspast financial bans and issues with payment processors. After all, payment systemslike PayPal cannot be used here. In terms of cryptocurrencies, back in April2018, the State Bank of Pakistan has issued a notice stating that all cryptosand tokens are to be banned in the country.
However, just like in most othercountries which have opted for an anti-crypto approach, the ban applies mostlyto organizations, exchanges and trading platforms. As the ban was effectiveimmediately, some cryptocurrency users in the country were unable to withdrawtheir funds from local crypto exchanges. As such, crypto usage among citizenshas fallen considerably.
Banks are also forbidden to getinvolved in disputes concerning cryptocurrencies, which means that noprotection is offered to investors. The ban was issued shortly after Indiaimposed restrictions for exchanges that offered fiat to crypto conversionservices.
The statement which mostly shut down the market read: “The SBP has not authorised or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such virtual currencies/coins/tokens in Pakistan (…) All banks, development financial institutions, microfinance banks and payment system operators, payment service providers are advised to refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.”
It was also mentioned, that banks “will not facilitate their customers/account holders to transact in VCs/ICO Tokens. Any transaction in this regard shall immediately be reported to the Financial Monitoring Unit (FMU) as a suspicious transaction.”
Reasoning for the ban
Very little reasoning has beenoffered to justify the ban. Reports indicate that simple arguments such asfraud, money laundering or tax evasion may have backed the decisions. Digitalcurrency users in Pakistan have reported that cryptocurrencies could haverepresented a new hope for country’s economy, alongside massive help for thepercentage of the population that remains unbanked.
Disclaimer: If you are looking to conduct digital currency-related activities in Iran or Pakistan, it is best to thoroughly check the updated applicable laws. Do not take the information presented in this article as advice.
Featured Image via BigStock.
