Raisi’s administration approached cryptocurrencies with a clear vision, and many high-level managers and experts have repeatedly endorsed the opportunities blockchain technology offers for the country.
Reviewing the Performance in Blockchain and Cryptocurrencies after Two Years of the 13th Government
Seyed Ebrahim Raisi‘s administration took office in Shahrivar 1400 (August 2021) with the slogan “Strong Iran.” Although the development of the blockchain and cryptocurrency industries was not explicitly part of the slogans put forward by him or his team, the administration entered the country’s executive scene with various promises such as neutralizing sanctions, reducing inflation, de-dollarizing the economy, and expanding trade relations with neighboring countries.
Under the dominance of sanctions, realizing such slogans through conventional economic and trade models seems impossible or extremely challenging, prompting Raisi’s administration to adopt innovative and unconventional measures at various stages.
Some of the most significant unconventional actions include those that resulted in increased oil and condensate sales to China and a few other partners, the unexpected resumption of diplomatic relations with Saudi Arabia, various measures to secure foreign currency—especially the UAE dirham—specific measures to release Iran’s frozen funds in South Korea and Iraq, various efforts to expand trade with neighboring countries, particularly Afghanistan and Iraq, and the facilitation of small business development through easier access to business licenses by consolidating the licensing process into a national portal.
The initiatives mentioned above were primarily procedural innovations aimed at solving major national issues. However, the unconventional challenges Iran faces require not only innovative processes but also the adoption of modern tools. When it comes to modern financial tools, cryptocurrencies stand out as an attractive choice, offering a toolbox of innovative and unconventional solutions for a country like Iran.
In a logical and bold approach, Raisi’s administration has embraced cryptocurrencies with a clear vision. The President himself, the First Vice President, the Economic Deputy, the Minister of Economy, and many high-ranking officials and experts within the Thirteenth Government have repeatedly acknowledged the opportunities that cryptocurrencies provide for the country. In this endeavor, they have also enjoyed widespread support from members of Parliament.
National Crypto Taskforce
The first meeting of the National Crypto Taskforce was convened in Dey 1401 (January 2023) by the order of Ebrahim Raisi. The establishment of this taskforce was a significant sign of a shared understanding at the highest levels of government regarding the potential of cryptocurrency tools. At a time when the country still lacks specific laws for cryptocurrencies, and even a legal definition for cryptocurrencies is absent, the formation of this taskforce was a bold initiative and a promising message to industry players.
The taskforce began its work in a climate where some powerful institutions from the previous administration were pursuing a negative stance and a complete ban on cryptocurrencies. At the very least, the taskforce brought together various governmental institutions and forced them into direct dialogue. As a result, at least in discourse, a unified language emerged in the country that emphasized legislation and the regulation of crypto assets and related services.
The National Crypto Taskforce was launched when Mohsen Rezaee was serving as the government’s Economic Deputy, and he was appointed as the head of the taskforce. Rezaee, who has a strong academic background in economics, possesses a relatively good understanding of cryptocurrencies and has expressed constructive views on the industry.
One of the actions of the taskforce during Rezaee’s tenure was delegating the drafting of a comprehensive cryptocurrency bill to the Legal Deputy of the President’s Office. Although Mohammad Dehghan, the Legal Deputy, has made fewer public statements on cryptocurrencies, he took the matter seriously and, with the help of national experts, prepared a draft bill. This draft, partly inspired by the EU’s MiCA regulation, is considered a forward-thinking document compared to the crypto regulations in many other countries, aligned with the needs of the industry, government, and the public.
Following Rezaee’s departure from his role as Economic Deputy, most of the pressure and challenges of creating national coordination on cryptocurrencies fell on the shoulders of Mohsen Rezaee Sadrabadi, the Secretary of the National Crypto Taskforce.
Cryptocurrencies’ Opportunities for Iran
Blockchain and cryptocurrencies have created new opportunities for all nations. However, the reality is that many countries do not have an essential need for the development of cryptocurrencies. A country that faces no challenges in exports and has access to adequate foreign currency resources does not see Bitcoin mining as a vital necessity. For such a country, Bitcoin mining may provide added value, but it is not critical; thus, it may not take the matter seriously, allocate necessary resources to it, or view mining as an important source of foreign currency. In international trade, a country that has access to the global banking network, SWIFT, and other financial exchange facilities does not necessarily need to use cryptocurrencies for letters of credit (LC) or to settle international transactions. In macroeconomics, a country with single-digit inflation may never consider Bitcoin (BTC) as a tool for inflation protection. A country with access to affordable financial and credit resources might not see the need to adopt decentralized financial services (DeFi).
However, in Iran, the reality is different. Even if sanctions are reduced, de-dollarization remains a vital program for the country. Instead of exporting energy, Iran could use a small portion of its abundant and cheap energy resources for cryptocurrency mining, compensating for much of the decline in oil exports. In trade with countries like Russia and its neighbors, Bitcoin could replace the U.S. dollar. In Iran, financing—both for the industrial sector and for the daily needs of the people—is a critical, unresolved issue, and decentralized financial services (DeFi) could help solve significant problems.
Institutional Opposition: The Main Challenge for Crypto Development
The new nature of cryptocurrencies and their connection to various fields inherently creates conflicts between different governmental institutions. The Islamic Consultative Assembly (Parliament), Central Bank, Securities and Exchange Organization, Ministry of Economy, Ministry of Industry, Mining, and Trade, Ministry of Energy, Trade Promotion Organization, Financial Intelligence Unit, Tax Affairs Organization, security agencies, and cyber police (FATA) are the main actors, each operating according to existing regulations and procedures. However, the practices of each institution often clash with certain aspects of the crypto ecosystem. In some cases, the benefits these organizations could gain from using cryptocurrencies are thwarted by interference from other bodies.
Given the serious need of the country and Iran’s sanction-impacted economy for the development of crypto-related services, the country suffers from the absence of a unified national vision and commitment. Despite the formation of the National Crypto Taskforce, the lack of cooperation or the negligence of some institutions has rendered many efforts—both from the private sector and the government—to leverage cryptocurrencies ineffective. To unify the overall policy surrounding cryptocurrencies and to facilitate and optimize their benefits and applications for the country, strong leadership and decision-making at the level of the President are urgently needed. The country’s need for international trade via cryptocurrencies, foreign currency generation through mining, the development of financial services, financing opportunities, and dozens of other benefits of cryptocurrencies cannot be repeatedly stalled by middle managers in various institutions, causing these exceptional and rare opportunities for the country to be lost.
Three Recommendations to the President
With confidence in the determination of President Ebrahim Raisi to develop Iran’s sanctions-hit economy, and considering the financial and human capital available in the country, the domestication of blockchain technology in Iranian companies, and the presence of all necessary conditions for the development and use of cryptocurrencies, three recommendations are offered. These can be implemented in a short period and, not only do they not impose any financial or foreign currency burden on the country, but they also create significant opportunities for income generation and job creation.
1. Submit the Comprehensive Cryptocurrency Bill to Parliament
This bill has already been drafted by the Legal Deputy of the President’s Office, and it must be reviewed quickly by the Cabinet and submitted to the Islamic Consultative Assembly (Parliament) for legislation. With the upcoming parliamentary elections, any delay could postpone its approval by one or two years, extending the current missed opportunities until the end of Raisi’s administration. By emphasizing and following up on this issue, the President can leave behind a lasting legacy for the 13th administration in the country’s history.
3. Halt Institutional Restrictions Until the Comprehensive Law is Passed
Institutions such as the Central Bank, the Securities and Exchange Organization, and even parts of the Parliament have, based on their duties, regulations, or at times personal discretion, imposed various restrictions on cryptocurrencies in the country. A very important point is that with the increasing restrictions domestically, more and more people are transferring their cryptocurrency assets from local platforms to foreign ones.
In the absence of specific legislation, it is appropriate for these institutions to be prevented from paralyzing the domestic blockchain industry so that the groundwork for establishing a balanced national policy, acceptable to all parties, can be laid with the approval of comprehensive laws.
3. Facilitate Mining, Trading, and Financing
Cryptocurrency mining is the fastest way for the country to generate foreign currency, which not only requires no government investment but can also relieve a significant burden from the government in foreign currency procurement. Unfortunately, due to institutional conflicts, the state of cryptocurrency mining in the country has seen a serious decline. The Customs Organization, Ministry of Energy, and Ministry of Industry, Mines, and Trade must be coordinated by the President to develop mining activities in the country.
Cryptocurrency trading can address part of the country’s needs in international trade. Using the foreign currency reserves stored in cryptocurrencies as a backing for letters of credit (LC) and leveraging this tool in trade with friendly countries, particularly Russia is an effective and innovative step that the 13th administration can take to showcase its commitment to its promises.
Financing national development projects is a significant challenge for any government, especially given the meager development budget. By utilizing the accumulated capital in cryptocurrencies, major national issues can be addressed. Cryptocurrencies can be used to finance national projects such as the development of Makran, a strategic concern of the Supreme Leader. However, the use of cryptocurrencies for financing is not limited to large projects. Allowing the private sector to establish platforms for crowdfunding and lending using cryptocurrencies could create new opportunities in the financial market, foster the development of productive businesses, and meet the financial needs of industries and citizens. In this regard, it would be appropriate for the Securities and Exchange Organization to prepare practical packages for the use of cryptocurrencies in the national financial market under the President’s guidance.
Implementing these recommendations requires no investment from the government. The financial and technical resources necessary for these actions exist within the private sector and the public. Achieving these goals only requires the leadership and direction of the President and his administration.
