Cryptocurrency exchanges flee Iran in the wake of US sanctions

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November 7, 2018 by
Cryptocurrency exchanges flee Iran in the wake of US sanctions

Most cryptocurrency exchanges have reportedly abandoned Iran after the U.S. imposed newer and tougher economic sanctions against the Islamic Republic.

The Head of Iran’s Blockchain Community, Sepehr Mohammadi, told local media that Binance and Bittrex are some of the platforms to have unofficially removed Iran from the list of supported countries to receive services.

The US has placed severe economic sanctions against Iran that has made the rest of the world snub the country’s oil, shipping and gas market, including its financial system.

Earlier in May, Iran faced a lot of sanctions which affected the country’s currency, aviation industry and other sectors, chiefly because President Donald Trump broke away from his predecessor Barack Obama’s engagement with Tehran.

The move against Iran’s financial system is expected to impede and restrict other countries from trading with Iran.

Sepehr Muhammadi while speaking to IBENA, an Iranian news agency affiliated to the country’s central bank, stated “some virtual currency exchanges have imposed restrictions on Iranian users, but no assets belonging to Iranians have been blocked.”

The sanctions mean that it will become impossible for Iranians to trade cryptocurrencies across borders, thereby limiting trade to a domestic market where bitcoin is sold at a significant premium relative to the global average price. It was not directly unclear which other exchanges had been prohibited from offering services to Iranians.

U.S. economic sanctions have previously struck at the heart of Iran’s cryptocurrency industry. In July, after being sanctioned for the first time, Mohammadi accused Donald Trump’s administration of stifling growth in Iran’s digital currency sector.

The Iran Blockchain Community chairman indicated at the time that owners of the confiscated BTC could not take legal action against the U.S. inside Iran, because cryptocurrencies were banned in the country by The Central Bank of Iran in April. Iranian banks were outlawed from dealing in foreign cryptocurrency citing money laundering and terrorism financing risks.

U.S. Secretary of State Mike Pompeo announced the sanction on Monday and warned: “It should be noted that if a company evades our sanctions regime and secretly continues sanctionable commerce in the Islamic Republic, the U.S. will levy severe, swift penalties on it, including potential sanctions. I promise you that doing business with Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran entirely.”

State-Backed Digital Currency

Iran is the world’s third largest oil producer and expected to leverage cryptocurrencies to compensate for the anticipated squeeze in petrodollars arising from the economic sanctions designed to cut oil sales from the country, the economy’s lifeblood.

Brigadier General Gholam Reza Jalali, head of Iran’s Civil Defense Organization, talked to the state media about the “great opportunities” presented by cryptocurrencies indicating that Tehran is developing a state cryptocurrency.

He said, “Cryptocurrencies can help bypass certain sanctions through untraceable banking operations.” He also emphasized the need for formation of a national cryptocurrency, the introduction of blockchain and also mentioned that the country has also authorized plans for cryptocurrency mining for the national good.

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