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In a strategic shift from its position on digital currency, Iran has decided to regulate the cryptocurrency industry rather than restrict it.
The decision was announced by Minister of Economic and Financial Affairs Abdel Nasser Hemmati at a national event in Tehran, where he said they aim to reduce the risks associated with cryptocurrencies while reaping all its benefits.
The country’s central bank will be responsible for managing all digital assets. From setting the regulatory framework and helping financial institutions adopt digital assets to monitoring transactions and ensuring compliance, all of it Even the central bank.
It has already published a set of guidelines on tax compliance and anti-money laundering procedures.
Currently, Iranian investors hold between $30 billion and $50 billion worth of crypto assets, roughly a third of the company’s total gold market.
The critical timing of the decision
The timing of this decision couldn’t be better. Hemmati believes that this has many benefits:
- Attracting local and foreign investors
- Creating more job opportunities and promoting job opportunities among young people
- Integrating Iran into the global economy and simplifying its access to a much wider range of financial services (those that only allow cryptocurrency transactions)
But there is one main reason that trumps all else: protection from sanctions. As Donald Trump prepares for his second term in the White House, Iran must prepare.
The first time Trump took office, he withdrew from the Iran nuclear deal. One of the reasons he cited was that the agreement was one-sided, mostly benefiting Iran and did not bring much of the peace promised by other countries.
Note: the The Iranian nuclear agreementalso known as the Joint Comprehensive Plan of Action (JCPOA), is a landmark agreement between Iran and the world’s great powers (including the United States of America) under which Iran promised to dismantle its nuclear program and allow other countries to closely inspect its nuclear program. Utilities in exchange for billions of dollars in sanctions relief.
Will the United States impose sanctions?
With the return of sanctions, Iran’s economy was dealt a heavy blow, and the country has been suffering ever since. Hence, now that Trump is back, there are rumors that he may revive the so-called maximum pressure policy against Iran by imposing more sanctions.
The chances of reviving this policy appear low. More sanctions on Iran could severely impact global oil supplies, removing nearly 1 million barrels of oil per day from the supply chain, says Arun Jayaram, an analyst at JP Morgan. But no one knows what the situation is with Trump, so Iran has wisely decided to buckle down.
Iran is offering other concessions as well. For example, the United Nations announced on Tuesday that Iran has decided to stop producing enriched uranium that can be used to make bombs.
New Iranian President Masoud Pezeshkian has also previously said that establishing friendly relations with the West, easing sanctions, and restoring “normal life” to Iranians are his primary goals during this period.