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Iran Recognizes Cryptocurrency Mining as a Proper Industry

Iran Gives Cryptocurrency Mining a Nod

In a move easily juxtaposed with US policies on cryptocurrency, the government of Iran has officially recognized cryptocurrency mining as an independent industry.

A move on July 21st by the Iranian Chamber of Commerce, Industries, Mines, and Agriculture ratified an economic commission approving crypto mining as a legitimate industry. The committee also passed a previous proposal to apply export rates for electricity used by domestic miners. Similarly, Deputy Minister of Electricity and Energy Homayun Haeri stated that government ministers would later vote on an approved electricity rate for mining farms.

Later deliberations on government regulations will be held in a cabinet meeting, as announced by the Governor of the Central Bank of Iran (CBI), Abdolnaser Hemmati.

Despite the recent legitimacy procured by the Iranian mining community, the sea to legal cryptocurrency mining in Iran has been far from smooth sailing. A statement made by the Iranian Energy Ministry in late June announced that mining processes increased national electricity consumption by seven percent over the summer.

This is due to the nation’s relatively low electricity rates, making mining attractive and profitable to cryptocurrency enthusiasts. The ministry consequently proposed for electricity export rates to be applied to miners, a bid echoed by the Iranian government on Sunday.

Following the lead of the Energy Ministry, the Iranian Power Generation and Distribution Company (known locally as TAVANIR) had previously announced that using electricity for mining purposes is illegal and household of commercial users found to be mining cryptocurrency would be cut off from the national grid.

In addition to the previous protests from Iranian energy executives, earlier statements made by Iranian officials included a recommendation by the CBI to bar cryptocurrency for domestic payments in January 2019, marking the future of cryptocurrency as a payment method in Iran uncertain. Despite this, the recent backpedal on mining by the CBI seems to be foreshadowing a victory for cryptocurrency in Iran, with Iranian enthusiasts hopeful for the future.

Title Image Courtesy of Aleksi Raisa 

The post Iran Recognizes Cryptocurrency Mining as a Proper Industry appeared first on Ethereum World News.

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Iran Recognizes Bitcoin and Crypto as an Official Industry, Says MP

The Iranian government’s Economic Commission has approved a mechanism of cryptocurrency mining in the country.

The Iranian government’s Economic Commission has approved a mechanism of cryptocurrency mining in the country, according to an announcement by the Iran Chamber of Commerce, Industries, Mines and Agriculture on July 22.

Iran’s Economic Commission approves crypto mining ‘mechanism’

Governor of the Central Bank of Iran (CBI), Abdolnaser Hemmati said that “a mechanism to mine digital coins was approved by the government’s economic commission and will later be put to discussion at a Cabinet meeting.”

Initially, Iranian authorities announced that they are planning to authorize Bitcoin and cryptocurrency mining earlier in July, when the CBI governor Abdol Hemmati reportedly claimed that the Iranian government had approved some parts of an executive law that would authorize mining of cryptocurrencies in Iran.

At the time, Hemmati argued that digital currency miners in Iran should contribute to the country’s economy, rather than letting mined Bitcoin (BTC) escape abroad.

Also, at the Commission’s latest meeting, its head Elyas Hazrati said that cryptocurrency is now recognized as official by the government, adding:

“We do believe that cryptocurrency industry should be recognized as an official industry in Iran to let the country take advantage of its tax and customs revenues.”

Crypto mining industry taking shape in Iran

Today’s news also follows the finalizing of a tariff scheme for cryptocurrency miners by the Commission on July 21. Energy Minister Homayoon Ha’eri did not specify the exact price scheme, but stated that the price is dependent on market factors such as fuel prices in the Persian Gulf.

Also yesterday, Deputy President of the Islamic Republic of Iran Customs Administration (IRICA) Jamal Arounaghi announced that the agency has not yet issued licenses for the import of cryptocurrency mining equipment. The minister said that if the government authorizes import of crypto miners, IRICA will develop related directives.

In contrast, an Indian government panel recommended today to ban cryptocurrencies and impose sanctions for any dealings involving crypto assets in the country.

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Turning to Crypto: China, Iran, and Now Palestine?

Palestine Looking to Phase Out Use of Israeli Shekel Through Crypto

States across the world are turning to crypto as Bitcoin has embarked on a jaw-dropping recovery and Libra has been unveiled to the world.

Reported by Al-Monitor on July 22nd, Palestinian Prime Minister Mohammad Shtayyeh is looking into launching a cryptocurrency that would be used as an alternative to the Israeli Shekel. Shtayyeh’s idea is to prevent Israel from blocking transactions, which ties in with the conflict between the two groups. He told a local television outlet that Palestine’s economy wants to start to phase out its reliance on the Shekel.

If launched, this digital Palestinian dollar may go against a protocol the state signed in 1994. The Palestinian Monetary Authority has the power of a central bank, but can not issue banknotes. Presumably, a crypto asset launched by the PMA would be classified as some sort of banknote.

Iran May Launch Gold-Backed Digital Asset

Palestine’s sudden idea to launch a cryptocurrency comes as Iran, a country recently revealed to have a rapidly growing Bitcoin mining economy, has purportedly begun research on and development of a gold-backed cryptocurrency. Per Asia Crypto Today, which cited an unlinked report from the local Tehran News outlet, the embattled nation has been approved by its central bank to launch the cryptocurrency. CEO of Iranian Information and Communication Technology (ICT) FANAP, Shahab Javanmardi was reported as saying:

“IRAN’S CRYPTOCURRENCY WILL BE SUPPORTED BY GOLD, BUT ITS FUNCTION IS SIMILAR TO OTHER CRYPTOCURRENCIES. THE CRYPTO ASSET IS DESIGNED TO MAXIMIZE THE USE OF IRANIAN FROZEN BANK ASSETS.”

This crypto project could result in harsher regulation on the Bitcoin space from the U.S. government, who have historically been heavy-handed against Iran and cryptocurrencies.

A Digital Yuan

Palestine’s and Iran’s efforts come hot on the heel of a report from the South China Morning Post. In the article, the head of the research division at the People’s Bank of China, Wang Xin, told an audience at the Peking University that Facebook’s Libra could affect international fiscal stability, and thus the Yuan.

What Wang is fearful of is that the cryptocurrency will be mostly backed by the United States Dollar but will be available the world over, giving the U.S. even more influence over politics and finance than it already has.

The proposed digitization of the Yuan, which is arguably already well on its way through WeChat Pay (literally 90% of stores and services accept this payment medium in urban areas), would theoretically give China a chance to combat the growth of Libra. But whether or not a Yuan “cryptocurrency” succeeds in the real world isn’t clear.

Photo by NASA on Unsplash

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Iran Finalizes Electricity Pricing Scheme for Cryptocurrency Miners

The Iranian Economic Commission has reportedly finalized a power pricing scheme for cryptocurrency miners.

The Iranian Economic Commission has reportedly finalized a tariff scheme for cryptocurrency miners, according to a July 21 report from Iranian economic daily Financial Tribune. 

Per the report, Energy Minister Homayoon Ha’eri announced that, while the tariff scheme has been finalized, it is awaiting approval from the Cabinet of Iran — a governmental body consisting of various ministers and other officials chosen by the president. 

While Ha’eri did not elaborate on the exact price scheme, he stated that the price is dependent on market factors such as fuel prices in the Persian Gulf. 

The head of Iran Electrical Industry Syndicate, Ali Bakhshi, previously proposed a price of $0.07 per kilowatt hour for cryptocurrency miners. Electricity in Iran is currently very cheap due to government subsidies; one kilowatt hour of electricity currently costs $0.05, with power being cheaper in the agricultural and industrial sectors. 

To put these prices in context, Mostafa Rajabi Mashhadi, the Energy Ministry spokesman for the power department, previously stated that the production of a single Bitcoin (BTC) uses about $1,400 in state subsidies. 

The Financial Tribune reports that mining one Bitcoin reportedly consumes as much electricity as 24 buildings in Tehran do in one year. 

Today’s news follows an announcement from the Central Bank of Iran (CBI), in which the banks governor Abdol Hemmati claimed that the CBI was planning to authorize cryptocurrency mining. 

Similar to today’s statements from Energy Minister Ha’eri, Hemmati said that a planned law will require crypto mining in Iran to abide with the price of electricity for export, rather than allowing miners to use the heavily subsidized internal energy grid.

Also today, Deputy President of the Islamic Republic of Iran Customs Administration Jamal Arounaghi announced that the agency has not yet issued licenses for the import of cryptocurrency mining equipment. While a tariff scheme exists, the final decision on licensure awaits approval from the government.

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Iran Has Not Issued Any Licenses for Importing Crypto Mining Equipment

Iran’s customs administration has not issued licenses for importing digital currency mining equipment into the country due to the absence of approval from the government.

Iran’s customs administration has not issued licenses for importing digital currency mining equipment into the country due to the absence of approval from the government.

Deputy President of the Islamic Republic of Iran Customs Administration (IRICA) Jamal Arounaghi said that the agency has not issued any licenses for importing cryptocurrency mining devices into the country, multilingual Tehran-based news outlet Mehr News Agency reported on July 21.

While cryptocurrency mining equipment is banned in the country, IRICA has determined a tariff rate for its import, defining it as related to the computers and central processors. Arounaghi noted that the presence of a tariff rate does not indicate than an item is legal or approved by the state, saying that the IRICA has tariff schemes for some illegal drugs as an example. 

The minister said that if the government authorizes import of crypto miners, IRICA will develop related directives.

Earlier in July, Cointelegraph reported that Iranian authorities are wrestling with the rising number of citizens turning to Bitcoin (BTC) mining and use as a means of coping with a sanctions-crippled economy.

At the time, Iran’s Minister for Information and Communications Technology, Mohammad Javad Azari Jahromi said that the country has become “a heaven for miners,” adding:

“The business of ‘mining’ is not forbidden in law but the government and the Central Bank have ordered the Customs Bureau to ban the import of [mining machines] until new regulations are introduced.”

In a recent report, the American Foundation for Defense of Democracies (FDD) assessed the current and future risks of cryptocurrency use by countries adversarial to the United States, including Iran.

The FDD warned that, in a scenario in which one of the countries convinces other nations to use a state-based cryptocurrency based on a major commodity export — such as oil — sanctions would be much harder to enforce.

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Virgin Bitcoin — Most In-Demand Crypto That Is Regulated Differently?

Demand for virgin Bitcoin is currently at its all-time high.

In a world where the global crypto community continues to face a growing number of regulatory hurdles with each passing day, the term “virgin Bitcoin” is starting to become more common among digital currency enthusiasts. However, it is of utmost importance to clarify what this term actually means and the significance it carries. 

According to Dave Jevans, the CEO of CipherTrace, virgin Bitcoins are essentially BTC tokens that do not have a transaction (TX) record associated with them. As a result of this, coins lack a defined attribution history, making them extremely useful for money launderers as well as other miscreants looking to mask the source of their illegally procured funds. Not only that, even the recipient typically has no traditional means of verifying the origin of the funds in question since virgin btc cannot be linked with any wallet or other cold storage entity.

Also, the Bitcoin blockchain serves as a decentralized ledger that allows anyone to follow the transaction history of a particular token with the touch of a button. For example, each Bitcoin carries with it a cryptographically provable history that contains a detailed record of ownership and transaction data associated with the token. Simply put, if a particular Bitcoin has been used to process even a single illegal activity in the past, all of its subsequent transactions will be tainted. This, according to Jevans, is one of the main reasons why certain cyber-savvy criminals go to such great lengths to launder their cryptocurrencies before putting them to use.

Virgin BItcoins on G-20 agenda  

With all of the aforementioned information in mind, it is important to consider that, at the recently concluded G-20 summit that took place in Osaka, Japan, the core governing committee agreed to adopt the standards of the Financial Action Task Force (FATF) — which are conventionally used in relation to fiat currencies — even for digital assets. On the subject, Cointelegraph spoke with Flex Yang, CEO of Babel Finance, who shared his thoughts on the issue at hand:

“When these standards go into effect, interexchange transactions will require transparency regarding senders and receivers of cryptocurrency. This opens doors to a wide berth of scrutiny as regulators probe different ledgers to determine what wallets participated in illicit crypto exchanges, hacks, etc. Bitcoin remains of interest to institutional investors, but their threshold for risk is much lower. With uncertainty as to how the crypto world will conform to the FATF standards, many traditional investors feel it best to air on the side of caution.”

Yang then went on to highlight the importance of virgin Bitcoins and how tainted crypto can become extremely tough to use when dealing with regulated financial institutions. For example, he pointed out that, if there existed even a sliver of proof that a particular Bitcoin had been used for shady activities in the past, that token could very well be seized or held indeterminately by regulators for a variety of legal reasons.“It’s like trying to deposit money in a bank that is from a drug cartel or criminal enterprise; banks will refuse to process transactions,” Yang explained.

So is it just virgin Bitcoin that people are after? 

As things stand, it appears as though a whole host of institutional investors are primarily looking to source virgin BTC, even though a uniform regulatory code applies to other altcoins as well. Simply put, nearly any currency — be it digital or fiat — can be used to facilitate illegal transactions. However, since Bitcoin offers its owners more transparency when compared to hard cash, virgin coins can be painted clean in a much easier manner. 

Additionally, it appears as though the Chinese government is particularly interested in virgin Bitcoins, even though it has not outwardly expressed any sort of leniency for individuals who may be in possession of these digital entities. According to Yang, China has yet to take any major action against its sprawling mining community. This is quite noteworthy because the demand for virgin Bitcoin seems to be spiking rapidly across the globe, and it seems as though mining operations in China are continuing to thrive and grow with each passing day. Yang then went on to say:

“The buyers are from US and other more regulated areas. China’s miners are just sellers….. Buyers may be pursuing these coins because of their novelty as well as the perceived ease-of-compliance in regulatory uncertainty. In truth, virgin Bitcoin might not benefit family funds or intuitions/individuals making the purchase. Still, there is clearly more confidence in virgin (or white) coin and it continues to fetch high premiums as a result.”

What is the problem with using Bitcoin that has a shady past?

At the very heart of the issue, Jevans notes that BTC that has a dark transaction history attached to it has more often than not been procured through a host of illegal pathways, such as global money laundering exercises or terrorism-related activities. And even after a particular token has been exchanged a large number of times, its payment trail can still quite easily be traced by investigators — thereby putting the owner at risk. The CEO of CipherTrace expounded on the topic by saying:

“Dark Tx histories also impede the fungibility of the btc if these tokens have a lower value. This a big concern for hedge funds that are concerned that their entire fund could be tainted by a few bad tokens. While this is less likely to affect those holding small amounts, larger traders could potentially, and unwittingly, hold larger amounts of stolen assets, lowering the value of their investment pool through association.”

Essentially, it appears as though even a single shady transaction can render a coin or token unclean. However, what is interesting is the fact that criminal Bitcoin can be sanitized by local governments by them selling such commodities after making a clear note of their past transactional history. The best example of this is when the United States Marshals Service held a sealed bid auction back in 2018 for a total of 3,813 Bitcoins (estimated to be worth $51.5 million at the time).

Virgin Bitcoin data worth taking a note of 

  • As per CipherTrace’s crypto intelligence team, over 75% of all transactions taking place on the black market are facilitated using Bitcoin.  
  • A large number of cyber criminals make use of techniques such as coin mixing to try and sever the path attached to a particular digital currency. And while it may still be possible to view the transaction history of a given token using advanced cryptographic methods, coin mixing makes the process extremely complicated. 
  • Russian conspirators involved with the alleged 2016 election hack in the U.S. were presumed to have funded their operations in part via a host of different Bitcoin mining operations based across the globe. 
  • In a similar vein, Jevans told Cointelegraph that virgin Bitcoins were also used to fund the registration payment for dcleaks.com.
  • CipherTrace’s studies have revealed that the recent crackdown carried out by the Iranian government on its mining sector were premeditated. Not only that, there are strong indicators suggesting that the local regime is currently making use of the confiscated mining gear for its personal gains.

Lastly, Jevans also commented on the premiums associated with virgin Bitcoin and how they differ from premiums related to regular BTC. On the subject, he was quoted as saying: 

“When we investigated BestMixer in November of 2018 they charged 5% for their Gamma level which was supposedly virgin coins. CipherTrace research revealed that these tokens were not in fact unused rather they had been cleansed via exchange hopping. This certainly raised the visibility and value of freshly mined coins. Moreover, the falling regulatory curtain is raising the value of clean coins as it becomes harder to launder funds through regulated exchanges.”

Additionally, according to Yang, premiums associated with virgin Bitcoin currently lay around the 10% mark. However, established players who have been operating within this domain for many years now are known to markup virgin coins by over 30%.

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Sanctions-Hit Iran A ‘Heaven’ for Bitcoin Mining, Says Gov’t Official

Iran is wrestling with the rising number of citizens turning to Bitcoin mining and usage as a means of coping with a sanctions-crippled economy.

Iranian authorities are wrestling with the rising number of citizens turning to Bitcoin mining and use as a means of coping with a sanctions-crippled economy.

Iran’s minister for information and communications technology, Mohammad Javad Azari Jahromi, told the Associated Press (AP) that the country has become “a heaven for miners,” according to a July 18 report. He noted:

“The business of ‘mining’ is not forbidden in law but the government and the Central Bank have ordered the Customs Bureau to ban the import of [mining machines] until new regulations are introduced.”

An ailing economy fuels cryptocurrency production and use

In the wake of toughened U.S.-led sanctions, Tehran is now facing the specter of hyperinflation. Oil export revenues have tanked by almost 90%, new data reveals, unemployment is veering close to 20% and millions are working below national poverty-line estimates. 

As AP reports, subsidized electricity rates — currently at half-a-cent per kilowatt — have fueled a thriving crypto mining community, although this is now set to change. Police raids on mining farms are being televised to disincentivize citizens and Iran’s Electrical Industry Syndicate has revealed its intention to hike up electricity prices to 7 cents per kilowatt.

Beyond mining, cryptocurrencies have made national headlines due to authorities’ concern that locals could be using them to convert the rapidly devaluing rial into other currencies. 

In 2018, the head of the Iranian parliament’s economic commission, Mohammad Reza Pour-Ebrahimi, revealed that roughly $2.5 billion had been funnelled out of Iran via crypto — yet the matter has not been publicly raised since.

Even as the U.S. purportedly attempts to muscle in on Iranians’ mining and use of crypto to bypass sanctions, local officials have underplayed its systemic importance. Jahromi remarked:

“Cybercurrencies are effective in bypassing sanctions when it comes to small transactions, but we do not see any special impact in them as far as mega-transactions are concerned. We cannot use them to go around international monetary mechanisms.”

Is Bitcoin halal or haram? 

Cryptocurrencies have even caught the attention of the ayatollahs, with the conservative newspaper Tabnak citing three theologians’ opinions that Bitcoin is either problematic or definitively forbidden — haram — under Islamic law. Yet the matter remains open to debate, as Jahromi noted:

“Some of our top clerics have issued fatwas that say Bitcoin is money without a reserve, that it is rejected by Islamic and cybercurrencies are haram. When we explain to them this is not a currency but an asset, they change their mind.” 

As reported, Iranian authorities have ratcheted up their mining crackdown this summer, confiscating ~1,000 units of mining machines from two now-defunct factories and cutting off power to miners ahead of the planned energy price hike. Some miners are allegedly weathering the authorities’ U-turn by taking refuge in the country’s mosques, which the government provides with free energy.

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US Sanctions on Iran Crypto Mining — Inevitable or Impossible?

The Iran-U.S. cold war spills into blockchain: Can America really stop Iran from mining Bitcoin?

If there’s one thing the United States has had a history of, it’s imposing sanctions on its enemies. Venezuela, Cuba, North Korea, Russia and numerous other nations have been subject to restrictions and penalties over the years, with the U.S. harnessing its economic muscle in order to punish pretty much any country that doesn’t play by the international rulebook. One of the most notable of these countries is Iran — which, since the Iran hostage crisis of 1979, has been on the receiving end of a long series of prohibitions, blocks and sanctions.

Some of these sanctions were lifted in January 2016, when the then-President Barack Obama, signed an executive order revoking them as part of the previous year’s historic nuclear deal with Iran. However, they were reinstated in November 2018, five months after the current president, Donald Trump, had decided to withdraw the U.S. from the aforementioned deal. And since then, things have only picked up steam, with the Trump administration announcing new sanctions in June in retaliation for the downing of a U.S. drone and then with American lawmakers introducing a bill in December that would place restrictions on Iran’s ability to operate a digital currency.

Following in the footsteps of Venezuela, the Iranian government is reportedly planning its own central bank digital currency, while a significant number of Iranian citizens have been mining various preexisting cryptocurrencies as part of an effort to mitigate the effects of a hyper-inflating national currency, the rial. But even if Iran could be distantly admired for demonstrating some degree of ingenuity here, the U.S. is working out how to curtail the Islamic Republic’s ability to profit from cryptocurrency. Iranian officials complained at the beginning of July that the U.S. Congress is aiming to block Iran’s access to Bitcoin (BTC) mining and other cryptocurrencies more generally, without specifying how exactly it intends to achieve such an aim.

Related: Iran’s Crypto Barometer — Regular Users Feeling the Heat

But while there’s little doubt that the U.S. would much prefer Iran to have no access whatsoever to cryptocurrency — as well as no ability to mint its own digital currencies — it doesn’t seem likely that it can do anything to restrict the Middle Eastern country other than introducing sanctions that prohibit American and foreign firms from having crypto-related dealings with the Islamic Republic.

Direct blocking?

On July 6, local news outlet Al-Fars reported that the Iranian assistant minister of industry, trade and supply, Saeed Zarandi, released a statement concerning cryptocurrency. In it, Zarandi noted that Bitcoin can be used as a tool to circumvent the American embargo, while he also claimed that the U.S. Congress is trying to prevent the production of Bitcoin in Iran. 

How exactly American lawmakers are hoping to do this, he didn’t explain. Nonetheless, he did add that several Iranian ministries are collaborating with the Central Bank of Iran to “resolve the issue of Bitcoin mining,” while more recently, the central bank’s governor announced that the government is planning to legalize mining, which it had previously been cracking down on. This would imply that the Iranian government is now intent on encouraging the use of cryptocurrencies as a means of resisting American-led pressures while also planning to develop its own central bank digital currency.

Related: Regulatory Overview of Crypto Mining in Different Countries

Given this possible change of direction, it would be instructive to consider how the U.S. could possibly restrict or prevent cryptocurrency mining and production from taking place in Iran. Or, to put this question differently, it would be instructive to consider just how much real power the U.S. government could potentially wield over Bitcoin and other cryptocurrencies.

When it comes to technical ways of preventing cryptocurrency mining and use, Bitcoin and blockchain experts argue that this would be very difficult for even the U.S. government to achieve. As Bitcoin Core developer Jimmy Song explained to Cointelegraph, the success of such an endeavour would be unlikely, as every country in which mining takes place will have to get involved. According to Song:

“A ban would require coordination on a massive scale, with every mining operation being compelled by their respective jurisdictions to not accept blocks that their governments ban. It’s really difficult to do, as anyone anywhere can mine. They would need at least 51% of the network, though practically speaking, the number would have to be much higher, like 75%, to enforce this ban in a reasonably efficient way.”

As Song concluded, “Too much mining power is outside the U.S. and it’s hard to prevent anything in a decentralized system.” This point is key, since the only realistic scenario in which the U.S. government could block cryptocurrency mining is if the activity took place only in the United States, as explained to Cointelegraph by Spencer Lievens, the CEO of Duality Blockchain Solutions:

“ISP providers can be required to block mining pools or anything related to mining. However, governments will have more luck in preventing mining in the countries they control than in preventing the mining of other, sovereign nations.” 

Thus, it’s highly unlikely that America could prevent Bitcoin or cryptocurrency mining directly, as there’s no way it could gain control of Iran’s internet or gather enough hash power to reject blocks originating from Iran. Similarly, Song also believes it’s highly improbable that it could prevent Iran from developing and producing its own digital currency, largely because the Iranian government or central bank would control this currency’s blockchain. “Iran can produce its own digital currency anytime it wants and no one can stop it,” he said.

Indirect blocking

Other Bitcoin developers agree with Song’s analysis, with fellow BTC developer Nicolas Dorier telling Cointelegraph in no uncertain terms, “It is not possible to prevent mining.” However, both Song and Dorier agree that there are indirect ways of restricting cryptocurrency mining in Iran and of frustrating the Islamic Republic’s attempts to profit from its own digital currency. For one, Dorier agrees that the U.S. could “prevent American miner manufacturers like Bitfury from selling their products to Iran, but there are many other miner manufacturers (e.g. in China).”

In much the same vein, Song adds that, while Iran could certainly produce its own currency without much harassment from the U.S. and its agencies, “getting other people to accept that as a means of payment or getting them to store their wealth in it is another matter altogether.”

In both cases, the issue once again turns to sanctions — something that the U.S. has already deployed in curtailing Venezuela’s ability to make a success of the ill-fated Petro. The U.S. could certainly pass legislation or an executive order that prohibits American citizens from purchasing any Iranian digital currency, and such legislation could potentially also prohibit any kind of transaction with the Iranian cryptocurrency sector, thereby making it harder for Iranians to access mining equipment, for instance.

Related: CBDCs of the World: The Benefits and Drawbacks of National Cryptos, According to Different Jurisdictions

In fact, this is indeed what the U.S. is attempting to do, as the “Blocking Iran Illicit Finance Act” — which is currently working its way through Congress — intends to make it very hard for Iranian crypto to exist. For instance, Section 303 of the act declares, “All transactions related to, provision of financing for, and other dealings in Iranian digital currency by a United States person or within the United States are prohibited.” And the act doesn’t stop with U.S. citizens. Section 304 states: 

“The President shall impose 5 or more of the sanctions described in section 6(a) of the Iran Sanctions Act of 1996 with respect to any foreign person that the President determines knowingly engages, on or after the date of the enactment of this Act, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services, or technological support, used in connection with the development of Iranian digital currency.”

Put simply, the Blocking Iran Illicit Finance Act will prohibit any U.S. citizen or foreign person from buying an Iranian digital currency or helping with the development of this currency. This doesn’t specifically address Bitcoin mining, but it’s probable that there will be some jurisdictional overlap insofar as equipment sold to Iranians to mine Bitcoin could potentially be construed as being used in connection with the development of an Iranian cryptocurrency. As such, the act may have an impact on the production (i.e., mining) of Bitcoin in Iran — at least, to the extent that it prevents American mining manufacturers from selling relevant equipment to Iranian organizations.

However, even if the act succeeds in preventing such manufacturers in most countries from selling mining units to Iran, even this might not prevent Bitcoin or cryptocurrency mining from taking place in the Islamic Republic. As Dorier put it, “Manufacturing miners is a well-understood process, so if there is unmet demand somewhere, I don’t think it would be too hard for a motivated entrepreneur to create or smuggle the supply.” Lievens added to this point:

“There’s always a way around blockages. The US would have to control Iran’s digital infrastructure. With Iran seeing support from Russia, this is an unlikely scenario.”

Indeed, if Iran is capable of building its own atomic weapons (as is often claimed), then it will certainly be capable of building its own ASIC chips and mining units. Then again, if the Blocking Iran Illicit Finance Act is passed, it will certainly find it much harder to profit from its own digital currency, with or without the ability to mine crypto. Just ask Venezuela.

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FDD Assesses Risks of Crypto Use by Countries Under US Sanctions

The Foundation for Defense of Democracies has assessed current and future risks of cryptocurrency use by countries adversarial to the United States.

The American Foundation for Defense of Democracies (FDD) has assembled an assessment of current and future risks of cryptocurrency use by countries adversarial to the United States in a report published on July 11.

In the report, the agency outlines possible future scenarios that would make blockchain technology sanctions resistance a larger threat. Specifically, the FDD analyzed how countries such as Russia, China, Venezuela, and Iran are deploying digital currency technology, and in what way this phenomenon could influence United States sanctions in future.

In the report, the FDD warns against a scenario in which one of the above countries convinces other nations to use a state-based cryptocurrency based on a major commodity export such as oil, sanctions would be much harder to enforce. 

Another scenario of concern would arise if an adversary were to make progress in the creation of digital currency wallet infrastructure in which its citizens can hold and trade the cryptocurrency, as well as use it for transactions with local companies.

The report further cautions against a U.S. adversary’s success with blockchain technology in its domestic banking system to a degree that it can integrate its platform into other nations’ financial system sectors. The FDD also identified the following threat:

“An independent cryptocurrency such as Bitcoin [BTC] gains wide adoption in commerce and becomes more relevant to the global financial system. Then, a U.S. adversary begins to build significant reserves in the cryptocurrency. The state thus uses its holdings to gain more influence in the global financial system.”

Meanwhile, Russian parliament, the State Duma, has again postponed the adoption of the country’s major crypto bill “On Digital Financial Assets” (DFA) until the autumn session as officials have not been able to reach a common position on the fate of digital currencies in Russia.

China’s central bank is reportedly developing its own digital currency in response to Facebook’s Libra, as the latter could purportedly pose a threat to the country’s financial system. Notably, the bank’s plans come at a time when China has taken a hard line toward cryptocurrency trading, with financial institutions banning Bitcoin trading, initial coin offerings and crypto exchanges.

In mid-May, Cointelegraph reported that Venezuela was considering to close mutual trade settlements with Russia using the ruble, as well as Venezuela’s oil-backed Petro digital currency, a controversial project that was first launched in February 2018.

In Iran, purchasing and selling cryptocurrencies is illegal, as deputy governor for new technologies at the Central Bank of Iran Nasser Hakimi announced. On July 6, Iranian Assistant Minister of Industry, Trade, and Supply stated that the United States Congress was working to stop Iran’s access to crypto and Bitcoin mining in an attempt to prevent evasion of sanctions.