Iranians Spend USD 2.5bn on Cryptocurrencies Abroad

Capital flees the country amid state ban on digital currencies.

by Kalina Tekelieva
09 May • 2.5 min
In News

Iranians have so far spent over USD 2.5 billion on cryptocurrencies abroad, Mohammad Reza Pour-e-Brahimi, chairman of the parliament’s economic committee, told Iranian news agency Ibena on Saturday.

Although only a small part of the Iranian citizens trade with digital currencies, billions of US dollars have fled the country in crypto purchases, Pour-e-Brahimi highlighted. According to him, one factor that drives Iranians to buy virtual coins outside of the country is the absence of a national cryptocurrency.

What triggers international crypto purchases is also the recently imposed ban on the use of digital coins in the Islamic Republic. Iran’s Central Bank (CBI) announced on April 23 that it has prohibited local banks from dealing with cryptocurrencies due to concerns for money laundering, terrorist financing and transfer of funds between wrongdoers.

Even before the ban, virtual currencies were not allowed in Iran, but locals were able to trade them on unofficial marketplaces.

National virtual currency

The tendency for Iranians to buy foreign cryptocurrencies could pose a serious risk to the Islamic Republic’s banking system, according to Pour-e-Brahimi. He pointed to the lack of transparency and credible backing as major downsides of the trade with foreign coins. 

Pour-e-Brahimi did not reject digital currencies per se. He expressed his belief that the future of the global economy lies with cryptocurrencies and advocated for the establishment of a national virtual currency. In this way, Iran could expand its economic relations, as it could enter multilateral monetary swap agreements with other countries.

The development of a national cryptocurrency has been a matter of discussion earlier as well. On April 28, Iran’s minister of information and communications technology Mohammad Javad Azari-Jahromi announced that his ministry has developed a prototype of a state virtual currency. Azari-Jahromi commented that the state ban on crypto trades will not curb the use of digital coins in a domestic context.

Crypto restrictions in Asia

Several Asian countries have already set out to restrict the use of cryptocurrencies. China imposed a ban on initial coin offerings (ICO) in September 2017 and according to a report by South China Morning Post, the country is planning to prohibit all domestic and foreign web sites connected with digital currency trading and ICOs. At the beginning of April, India’s central bank RBI blocked all transactions in cryptocurrencies and gave financial institutions three months to terminate their exposure to crypto trading. A few days later, Pakistan stepped in the same direction and prohibited banks and financial services providers from dealing with virtual coins.