19 Apr 2022 Jane Whitmoore
Iran To Launch CBDC; Increases Penalties For Unauthorized Crypto Mining
Iran and its central bank – the CBI – are planning to join other countries in pushing custom central bank digital currency (CBDC), as the country’s national bank is seen issuing a series of regulations to commercial banks that pave the way for a crypto-rial.
The new legislations aim to clear uncertainties about the minting, distribution, and redemption of the crypto-rial. According to the rules, only the CBI has the right to issue the currency and also dictate its maximum supply.
In turn, Iranian governmental authorities like the Iran Chamber of Commerce, Industries, Mines, and Agriculture announced that the CBDC would be issued on a permissioned distributed ledger technology (DLT) network “consisting of authorized financial institutions and capable of implementing smart contracts.”
The smart contract functionality is among the leading focus points of the crypto-rial development, which sets the project apart from other CBDCs since many projects do not yet disclose whether or not the CBDC would implement smart contracts.
The smart contracts would also allow Iranian commercial banks may provide new financial products automated through smart contracts, as well as upgrade some existing services.
However, the CBI will have the final word in deciding who participates in its DLT ecosystem and what capacity. Also, the governmental statement did not provide any information about a possible wallet, nor did answer vital questions about security and privacy measures.
Despite the uncertainty about key aspects of the CBDC, the demand for such a project increased exponentially, with Iranian traders surpassing one million and moving over 50 trillion rials ($200 million) in daily transaction volumes. Most of the traders are now seeking alternative places to conduct trades since the Tehran Stock Exchange saw a big dip in the value of most Iranian stocks.
Heavier sanctions for illegal miners in Iran
Meanwhile, Iran’s Power Generation, Distribution, and Transmission Company (Tavanir) noted that the country’s administration will approve new rules to increase penalties for unauthorized cryptocurrency mining.
“The increased penalties include raising fines by at least three and at most five times, imprisoning the offender, and revoking the offender’s business license.” Mohammad Khodadadi Bohlouli stated, adding that “any use of subsidized electricity intended for households, industrial, agricultural, and commercial subscribers for mining cryptocurrency is prohibited.”
The move comes after the Iranian government-approved cryptocurrency mining as an industry in 2019, with over 100 licenses for crypto mining operations issued in January 2020 alone.
The announcement and heavier sanctions address unauthorized miners, which are using household electricity for cryptocurrency mining. In December 2021, crypto miners halted operations to prevent winter blackouts.
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