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Iran’s Central Bank announced in late April 2018 that it was prohibiting all Iranian financial institutions, including banks, credit institutions, and currency exchanges, from handling cryptocurrencies.  The Central Bank’s decision was in line with the Iran’s recent efforts to address deficiencies in its policies on anti-money laundering and combating the financing of terrorism—efforts undertaken to comply with the action plan of the Financial Action Task Force on Money-Laundering (FATF).  The Bank’s decision was preceded by debate between those in the country who were concerned about the risks inherent in the use of cryptocurrencies and those who believe their use is the wave of the future and essential to the country’s financial stability in light of US financial sanctions.

I.  Current Government Policy Toward Cryptocurrencies

The Central Bank of Iran (CBI) officially announced on April 22, 2018, that it has prohibited the handling of cryptocurrencies by all Iranian financial institutions, including banks and credit institutions.  The decision also bans currency exchanges from buying and selling virtual currencies or adopting measures to facilitate or promote them.[1]

The CBI’s action was in line with Iran’s recent efforts to address deficiencies in its policies on anti-money laundering and combating the financing of terrorism, with the aim of complying with the action plan of the Financial Action Task Force on Money-Laundering (FATF).  The FATF, an intergovernmental organization established to combat international money-laundering and terrorist financing, will determine at its plenary meeting in June 2018 whether to remove Iran from the FATF list of Non-Cooperative Countries or Territories.[2]  Previously, the CBI had only sought to warn people of the potential risks inherent in cybercurrencies,[3] although a directive passed by the Money and Credit Council, the most important policy decision-making organ of the CBI, “[had] deemed non-physical and virtual transactions against the law, meaning that Iranian [currency exchanges could] not deal in cryptocurrencies.”[4]

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II.  Previous Objections to Cryptocurrencies

According to the CBI’s statement of April 22, the decision to ban cryptocurrencies was actually made on December 30, 2017, during the thirtieth meeting of Iran’s High Council on Anti-Money Laundering.[5]  While the Bank’s decision is in accord with CBI governor Valiollah Seif’s statement of January 10, 2018, that the CBI “[did] not approve of Bitcoin in any way” and that investors were urged to choose safer investment options,[6] Seif was reported as saying eleven days earlier that “CBI is also striving to bring about relative security to [the trade of Bitcoin].”[7]  Moreover, the head of the Electronic Banking Department at the Monetary and Banking Research Institute had stated in October 2017 that the general air surrounding cryptocurrencies was positive at the Central Bank, which viewed them as something that could be controlled and not as multilevel marketing or a pyramid scheme.[8]

In the view of CBI officials, cryptocurrencies are problematic because no one clearly knows which people or entities are behind them and no one is accountable if someone’s capital is lost, a result made more likely when multilevel marketing and pyramid schemes are used to introduce Bitcoin as an attractive option for investment.[9]  CBI officials see cryptocurrencies as risky investments because they experience excessive fluctuations and have “turned into arbitrary mechanisms which market participants can interpret ambiguously—thus triggering speculation.[10]  Moreover, because virtual currencies, unlike money, are not issued by the Central Bank, the Bank has no means of controlling them,[11] and transactions made with them through illegal money lenders causes damage to the national interest.[12]

Outside the Bank, the head of the Majlis (Parliament) Economic Commission offered a religious objection to cryptocurrencies, stating that “[d]eals and transactions made through Bitcoin are in no way in accordance with Islamic and economic fundamentals, therefore related entities, especially the central bank, must exert the necessary supervision over these deals.”[13]

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III.  Ongoing Discussions on Cryptocurrencies

The Bank’s decision to ban the use of cryptocurrencies by financial institutions is a blow for those in Iran who viewed virtual currencies as a means of overcoming problems related to the banking industry and international sanctions.[14]  Before the ban was announced, the CBI’s Information Technology Chief, Nasser Hakimi, had reported that, along with the adoption of a framework that should be adhered to for using cryptocurrencies, the Central Bank was considering the adoption of a national virtual currency, either to be generated by the Central Bank or another entity.[15]  One of the motivations for developing such a currency was that it could potentially be used to replace the US dollar, an attractive prospect for Iran because US sanctions over Iran’s nuclear program bar Iran from using the US financial system.[16]

Iran’s Minister of Information and Communications Technology in February 2018 had announced a plan for Iran to develop its own virtual currency, a move that had the backing of Iran’s cyber-security authority provided that virtual currencies were properly regulated.[17]  Even the CBI’s Hakimi believes that the blockchain system and cryptocurrencies like bitcoin will eventually replace the current systems,[18] a view shared by Masoud Khatouni, the deputy for information technology and communications network at Iran’s biggest bank, Bank Melli Iran (BMI), who has stated that cryptocurrencies are “currently shaping the future of banking” and should be recognized and widely accepted in the banking system and used by the banks themselves.[19]

Khatouni opposes imposing any limitations on the use of digital currencies so that the country’s businesses and players can employ them with more confidence and with higher levels of transparency.  In his opinion, delaying the formal introduction of digital currencies into the country will result in damage to the country’s banking system, and the devising of “comprehensive, precise and transparent rules and regulations for the use of digital currencies” on the basis of global experience by a specialized group of CBI regulators is essential to prevent the many people in the country who buy and sell digital currencies from doing so secretly.[20]

The secretary of Iran’s High Council of Cyberspace (HCC) likewise welcomes the idea of bitcoin and other cryptocurrencies if they are harnessed by clearly-stated regulations for the reason that many in Iran are already purchasing, selling, or mining digital currencies, dealing with them in exchange shops, and creating content and establishing startups with them.[21]  The head of the Iranian Association of Moneychangers had also recommended that cryptocurrencies “be met with regulatory frameworks that would create the opportunity of their use because a lack of regulations will eventually lead to fraud.”[22]  Regarding certified currency exchanges, the CBI’s Hakimi had also recommended that they start dealing in bitcoin where possible because such virtual currencies can assist traders who are unable to open lines of credit as a result of banking hurdles.[23]

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Prepared by Barry Lerner
Legal Research Analyst
June 2018

[1] Iranian Financial Institutions Barred from Using Crypto-Currencies, Financial Tribune (Apr. 22, 2018), (available by subscription).

[2] Id.; Barry Lerner, Iran: IMF Evaluates Iran’s Legislative and Institutional Efforts to Combat Money Laundering and Terrorism Financing, Global Legal Monitor (Apr. 13, 2018), //, archived at

[3] No Bitcoin Trade for Moneychangers, Financial Tribune (Dec. 23, 2017), economy-business-and-markets/78454/no-bitcoin-trade-for-moneychangers, archived at  The CBI is responsible for, inter alia, “formulating the monetary and credit system of the country, formulating the regulations pertaining to outflow as well as repatriation of Iranian and foreign currency, [and] foreign exchange transactions.” Laws & Regulations, Central Bank of the Islamic Republic of Iran, (last visited Mar. 19, 2018), archived at

[4] No Bitcoin Trade for Moneychangers, supra note 3; Central Bank of the Islamic Republic of Iran, Central Banking in Iran, at 12–13, (last visited Mar. 19, 2018), archived at

[5] Iranian Financial Institutions Barred from Using Crypto-Currencies, supra note 1.

[7] CBI Governor Urges Caution on Bitcoin Trade, Financial Tribune (Dec. 31, 2017), https://financialtribune. com/articles/economy-business-and-markets/78986/cbi-governor-urges-caution-on-bitcoin-trade, archived at

[8] Maziar Motamedi, Fate of Cryptocurrency in Iran Hangs in Balance, Financial Tribune (Oct. 19, 2017),, archived at

[9] Iran Cryptocurrency Policy Soon, Financial Tribune (Jan. 3, 2018), economy-business-and-markets/79209/iran-cryptocurrency-policy-soon, archived at; Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, Financial Tribune (Nov. 14, 2017),, archived at

[10] Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, supra note 9; Iran Central Bank Warns on Cryptocurrency Investment, IRNA (Feb. 1, 2018), 6292, archived at https://perma. cc/4CBE-QRD2.

[11] Id.

[12] Iran Cryptocurrency Policy Soon, supra note 9.

[14] Iran’s Banks Banned from Dealing in Crypto-currencies, BBC News (Apr. 23, 2018), technology-43865105, archived at

[15] Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, supra note 9.

[16] CBI Governor Urges Caution on Bitcoin Trade, supra note 7.

[17] Iran’s Banks Banned from Dealing in Crypto-currencies, supra note 14.

[18] Iranian Lawmakers to Discuss Bitcoin, supra note 13.

[19] Iranian Banker Calls for Cryptocurrency Recognition, Financial Tribune (Jan. 7, 2018), https://financial, archived at

[20] Id.

[21] Iran Cyberspace Authority Welcomes Bitcoin and Other Crypto-Currencies, Financial Tribune (Nov. 25, 2017),, archived at

[22] No Bitcoin Trade for Moneychangers, supra note 3.

[23] Motamedi, supra note 8.

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Last Updated: 12/30/2020