Iran bans banks from cryptocurrency trading

Thomas McMullan Read more April 23, 2018

Iran is following in the footsteps of China and South Korea, announcing a ban from its central bank on the trading and promoting of cryptocurrencies.

Iran bans banks from cryptocurrency trading

As reported by Reuters, Iranian state news agency IRNA issued a statement on Sunday claiming that banks, credit institutions and currency exchanges “should avoid any sale or purchase of these currencies or taking any action to promote them”.

This comes in the wake of reforms designed to stabilise Iran’s currency, the rial, which has fallen to an all-time low, amidst fears that the US will reinstate sanctions that could cripple the country’s economy. This month Iran has banned money changes outside of banks and unified exchange rates, and has now banned trading in cryptocurrencies.

Donald Trump has a deadline of 12 May to decide whether or not to re-impose US economic sanctions on Tehran.

By banning cryptocurrency trading, Iran is most likely attempting to block anxious traders from turning away from the rial in favour of bitcoin and its ilk. It is a similar tactic to that taken recently by China, although the volatility of Iran’s currency is of a different order. China cited “financial risks” as the reasons for its ban on virtual currency trading or ICOs.

Earlier this month, a paper was published by an Islamic scholar that declared bitcoin permissible under Sharia Law.

“Bitcoin is permissible in principal as bitcoin is treated as valuable by market price on global exchanges and it is accepted for payment at a wide variety of merchants,” the study by Muhammad Abu-Bakar of Blossom Finance in Indonesia states. “Moreover, many private individuals accept bitcoin as a medium of exchange in their private transactions.”

The publication of Abu-Bakar’s report coincided with a dramatic $1,000 spike in value for bitcoin, with some speculation around a possible connection between the two events. Other experts instead suggested that the spike may have been caused by a large institutional investor.