Let’s agree that blockchain technology can be used as an alternative to safeguard one’s asset especially when dealing with a rough economy. And for this reason, different countries have different reactions to cryptocurrencies.
One of the biggest challenges in today’s crypto market is the regulatory changes applied by different countries. Until today, there is no uniform consensus among regulators worldwide how exactly to approach digital currencies. China, for instance, banned the crypto exchanges and is even looking to take out crypto mining. One of the latest countries to implement a ban on cryptocurrency dealings is Iran. Iran’s central bank decided to ban cryptocurrencies including Bitcoin.
Stopping a Currency Crisis
According to the central bank,
“Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them”.
With Iran’s move, it plans to unify its official and open market exchange rates. In addition to this, it has also moved to ban money moving outside of banks. The reason is that the country is looking to stabilize their local currency, the rial, that plunged to an all-time low after fears over crippling sanctions.
US President Donald Trump is set to make a decision soon whether or not the US will restore US sanctions on Iran. This will be a huge blow to the 2015 deal that was made between Iran and the six other major powers. Trump has already pressured Europe to work hand in hand with Washington in implementing the return of sanctions.
Banning the use of cryptocurrencies in the country could potentially block traders from turning into Bitcoin and other digital currencies over Rial. It has been used by China considering the number of crypto traders in the country. However, it is worth mentioning that Iran’s currency is also becoming volatile considering the political situation that the country is currently experiencing.
Permissible Under Sharia Law
There could’ve been more people in Iran interested in investing in Bitcoin after an Islamic scholar declared Bitcoin to be permitted under Sharia Law. According to the study of Muhammad Abu-Bakar of Blossom Finance in Indonesia, “Bitcoin is permissible in principal as Bitcoin is treated as valuable by market price on global exchanges and it is accepted for payment at a wide variety of merchants”. The study also added that “Moreover, many private individuals accept Bitcoin as a medium of exchange in their private transactions”.
After the publication of the study, there was a dramatic increase in the price of Bitcoin by as much as $1,000. Based on speculations, there is a connection between the two events. There are even some experts that suggested the entry of large institutional investors.
Iran is in a position wherein people could easily resort to using cryptocurrencies considering the threat of the US and other allies to impose sanctions against the country. In addition to this, the study of a Muslim scholar permitting Bitcoin under Sharia Law encourages people in Iran to choose cryptocurrencies.
Different countries still have a different take when it comes to cryptocurrencies. Venezuela, for instance, has decided to make its own cryptocurrencies in reaction to the sanctions imposed against the country.