From the Need to Facilitate Cryptocurrency Mining to the Benefits of Tokenization
Although the Elecomp Exhibition provides an opportunity for cryptocurrency businesses to introduce themselves to new and interested audiences in the digital currency field, Elecomp 2024, according to the CEO of the Iranian Blockchain Association, did not witness a significant presence of blockchain companies due to an inconvenient schedule. During this event, the CEO presented his demands to the new government, emphasizing the need to facilitate cryptocurrency mining processes in the country, and encouraged enthusiasts to turn to tokenization and creating new cryptocurrencies.
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The 2023 Elecomp Exhibition, held after a three-year hiatus due to COVID-19, saw a relatively strong presence of blockchain businesses and cryptocurrency exchanges. However, at the 2024 event, this presence was significantly diminished. Among blockchain-related businesses, only the Iranian Blockchain Association, along with two exchanges, Sarmayex and MehranBit, participated in the 27th International Electronics, Computers, and E-Commerce Exhibition.
During a visit to Elecomp 2024, held from Saturday, June 29, to Tuesday, July 2, at the Permanent Exhibition Center, we interviewed Kaveh Moshtagh, the CEO of the Iranian Blockchain Association. Below is the full conversation.
We asked Moshtagh about the limited participation of blockchain companies in Elecomp 2024. He replied: “This year’s exhibition was less crowded compared to previous years. There were stylish and attractive booths, but not many blockchain companies participated. One reason for this was the timing of the exhibition. Since the event was held on weekdays rather than holidays, enthusiasts could not attend freely, which discouraged companies from participating.”
Self-Regulation for Cryptocurrency Exchanges
On the topic of blockchain-related regulatory initiatives, Moshtagh explained: “We are pursuing self-regulation in this field, also known as an SRO (Self-Regulatory Organization). At this stage, to establish an exchange, you only need a recommendation letter from one of the following organizations: the Iranian Blockchain Association, the FinTech Association, or the Tehran ICT Guild Organization. With this letter, you can obtain a payment gateway, and security agencies won’t interfere with your activities.”
He highlighted the advantages of self-regulation: “Self-regulation typically occurs in advanced countries. However, we are striving for it here in Iran, which might be unexpected. In this area, 15 regulatory bodies, including the Central Bank, the Ministry of Economy, and the Ministry of Industry, Mine, and Trade (MIMT), are active. We also work under their supervision.”
Moshtagh noted: “The self-regulation process started with exchanges nine months ago. Payment gateways have been provided to self-regulated exchanges for a month now. This move could address regulatory challenges. Anyone intending to operate legally, such as avoiding involvement in gambling, can approach one of these three bodies. With the minimal requirements for compliance, we issue them a recommendation letter, and they are supported like any other business.”
Regarding the operational framework of self-regulated exchanges, he elaborated: “Currently, around 120 exchanges are working with the Blockchain Association, and a few more collaborate with other entities. Soon, we will launch a website listing approved exchanges so that the public knows which ones are trustworthy. Additionally, we aim to increase the payment gateway limit for exchanges.”
Advocating for Tokenization
The CEO of the Iranian Blockchain Association emphasized that the country already has enough exchanges, stating: “Aside from launching exchanges, there are other opportunities in the blockchain field. One such area is tokenization, which involves converting physical assets into tokens.”
He added: “Tokenization has significant applications, and companies can profit well from it. Currently, tokenization processes for real estate have begun. We’ve also seen examples of digital lamb tokens at the Planet Innovation Center or Anthurium flowers in the Phoenix platform, which sold out in hours.”
He mentioned: “We have established a tokenization task force in the Blockchain Association to develop regulations for this sector and become a self-regulatory body in this field. Those interested in tokenization can approach the Association, where we explain the methods to them.”
On efforts to advance tokenization through government organizations, Moshtagh remarked: “If the government allows private companies to operate in tokenization, better results will be achieved. For instance, ‘Mazdax’ received permission to tokenize stock market funds, and it seems to have yielded good outcomes so far.”
The Launch of Digital Rial: An Opportunity to Program the National Currency
Referring to the pilot launch of the Digital Rial in Kish, Kaveh Moshtagh, CEO of the Iranian Blockchain Association, stated: “Alongside asset classes like currency and gold, we now have a new class called digital assets. Cryptocurrencies and electronic money are digital assets. Our national currency has also created a branch within this class. However, the Digital Rial is not a competitor to cryptocurrencies because the playing field for the Digital Rial differs from that of cryptocurrencies.”
He continued: “Until smart contracts are integrated with the Digital Rial, it is no different from the money in bank cards. However, once smart contracts are implemented on the Central Bank’s Borna network—where the Digital Rial operates—we can make the national currency programmable. From this perspective, launching the Digital Rial is a good step and can make our currency more functional.”
Sanctions Challenges for Iranian Cryptocurrency Users
Moshtagh pointed out that Iran is blockchain-sanctioned and emphasized: “Even blockchain education for Iranians is subject to sanctions. As a result, although some internationally successful cryptocurrencies were developed by Iranians, these individuals operate under pseudonyms due to international sanctions and avoid disclosing their Iranian identity. They create DAOs (Decentralized Autonomous Organizations) to manage these projects, and their cryptocurrencies have achieved global recognition.”
He warned users about relying on Tether (USDT), explaining: “Tether is an American company that complies with U.S. sanctions and can potentially restrict Iranians. Tether’s smart contracts include a clause that allows funds to be frozen in Iranian wallets. Essentially, Iranians can be penalized for simply being Iranian. I strongly urge users, among whom Tether is quite popular, to consider DAI instead. DAI does not carry the risk of being frozen.”
Cryptocurrencies Absorb Inflation from Dollar Notes
Moshtagh noted that cryptocurrencies, including Tether, do not increase currency prices but rather mitigate inflationary pressure: “Instead of people buying physical U.S. dollar bills, they can purchase digital currencies, which creates the impression of more dollars being available in the country. In reality, buying cryptocurrencies does not equate to capital flight; it’s merely a currency conversion. If we can use these for imports, there won’t be an issue.”
Regarding the potential establishment of a Bitcoin ETF in Iran, Moshtagh stated: “Some groups are working towards this goal, and steps have been taken by the Securities and Exchange Organization. We hope this initiative materializes with the new government in place.”
He elaborated on cryptocurrency-related demands from the new government: “Self-regulation in this sector would be excellent. Security agencies, government bodies, and the Central Bank have been cooperating with us quite well, even exceeding our expectations. The ministries have also been supportive. The Blockchain Association is ready to pursue industry demands with the new administration.”
Cryptocurrency Mining: A Solution to Many Problems
He highlighted a longstanding demand from the government: “One of our persistent demands, also outlined in the cryptocurrency mining law, is allowing cryptocurrency to fulfill foreign exchange obligations. This means Iranian importers could use cryptocurrencies for purchases, bypassing sanctions to some extent. Although this law was passed over two years ago, it has yet to be implemented, and we are essentially sanctioning ourselves. The Ministry of Industry and the Central Bank need to act swiftly in this matter.”
He stressed the importance of mining, stating: “The key lies in cryptocurrency mining. By allowing it, we can offer electricity and gas—resources we cannot export—at reasonable prices to Bitcoin miners. These miners can extract Bitcoin, which we can then use for imports. This approach is akin to exporting electricity and gas. Domestic platforms can also use this method to procure currency and address their issues. This way, it’s as if new currency has been introduced without any financial outflow.”
Moshtagh concluded: “Money converted into Tether or Bitcoin isn’t wasted. Instead, it’s used to purchase a new class of assets, which can then facilitate international purchases. Institutions can use these assets for imports. The idea that this money is wasted stems from a lack of recognition of digital assets. However, the government’s perspective on this matter has significantly improved, and we hope the new administration continues this trend. The technical experts within the government have already embraced this view.”
