On June 2, a member of parliament from Tabriz, Mohammad Hossein Farhangi, urged Iran’s Central Bank to take cryptocurrency seriously because of its potential economic opportunities for the country. His statements highlighted that there are several ways through which Iran could benefit from cryptocurrencies. Yet, Iran is not exploring any of them effectively—why not?
The short answer is that, on an institutional level, Iranian policymakers are having a very difficult time understanding how blockchain technology works. As a result, they are unable to take advantage of its benefits and mitigate its risks. For instance, wariness of its potential to facilitate capital flight and otherwise undermine the country’s vulnerable economic system led parliament to prohibit individuals from using cryptocurrency at all in May. Understandably, the population is less apprehensive.
In Tehran, as in any other major city, there is a bustling subculture of blockchain and cryptocurrency enthusiasts. Formal organizations exist, such as the Iranian Blockchain Association, as well as less formal groups of researchers, students, investors, and hobbyists. Such groups meet regularly in local restaurants, host podcasts, and operate dedicated news sites, like CoinIran. There, they discuss the latest tech, debate the virtues of competing cryptocurrencies, and share investment tips and warnings about scams. In June 2019, there were even reports of cryptocurrency mining operations being set up in mosques.
However, the legality of mining cryptocurrencies, just like using them to conduct transactions, is questionable and inconsistent. On June 3, a plan was announced by which mining was, again, legalized. As a result, pending penal cases for those who had been mining illegally were slated to be dropped and their equipment returned. Such equipment includes mining rigs, which are computers built around specialized microprocessing chips designed specifically to complete the algorithmic calculations that yield cryptocurrency. Characteristically, the details, such as which equipment will be allowed to be used, are still being worked out.
In 2018, Iran recognized cryptocurrency mining as a legal industry in order to monitor and regulate the mining farms that were already operating within the country. It also discussed creating its own national cryptocurrency, which it has yet to do. At the time, Iran seemed to be a great place to mine…