Persian Files ISSN 2975-0598 Volume 30 Issue 1
Author: Silvia Boltuc

Executive Summary

Iran’s approach to cryptocurrency regulation has shifted significantly in early 2025, with the government issuing directives for supervision and control of the crypto market. These measures came amid widespread power outages, concerns over illegal Bitcoin mining, and the continued impact of international sanctions.

The government has moved toward greater oversight, issuing directives to regulate cryptocurrency markets while also attempting to control illicit mining activities.

Moreover, these efforts allow the government to prevent, among other things, citizens from moving large amounts of capital without being subject to taxation. The Central Bank of Iran (CBI), in fact, recently ordered the closure of rial payment gateways for cryptocurrency exchanges. One of the main reasons for the CBI’s intervention is the ambiguity surrounding the operations of these exchanges. The transaction volume of cryptocurrency exchanges has reached several billion dollars, while operators in this sector have not yet paid taxes, and their financial statements remain hidden and non-transparent.

The new regulation also aligns with Iran’s broader strategies to mitigate the effects of economic sanctions. However, tensions persist between regulatory ambitions, economic necessity, and energy crises, raising questions about Iran’s long-term financial strategy.

This report assesses the key developments in Iran’s cryptocurrency policies, their implications for domestic and international actors, and the potential risks associated with these changes.

Information Context

In January 2025, Iran’s government issued a directive formalising cryptocurrency market regulations. Crypto platforms can now obtain direct payment gateways within a regulatory framework, while all brokers must conduct rial transactions transparently through designated accounts approved by the central bank.

Iranian President Masoud Pezeshkian stated in a letter to Mohammad Reza Farzin, the Governor of the Central Bank of Iran, that the CBI is the sole authority responsible for regulating the cryptocurrency (ramzpol) market. This includes determining the permitted conditions for holding and exchanging digital assets, as well as being the exclusive entity for licensing, oversight, regulatory frameworks, and issuing necessary directives for both global and stable cryptocurrencies.

All participants in the cryptocurrency sector, including individuals, legal entities, and businesses, are subject to Central Bank oversight. Their establishment and activities are subject to obtaining a license from the bank.

Additionally, the CBI will have direct and unrestricted access to all data, statistics, and records related to entities involved in cryptocurrency activities.

In December 2024, Iran faced rolling power outages across multiple regions, with authorities blaming unauthorised Bitcoin mining for exacerbating energy shortages. Officials confirmed large-scale illegal mining operations had been discovered, prompting calls for judicial action. Private sector representatives report that the damage from power outages has reached $20 billion.

Iran legalised cryptocurrency mining in 2018 but has periodically restricted or banned it, especially during peak energy demand. Licensed mining operations face high tariffs, leading to widespread underground mining. The government has incentivised citizens to report unauthorised operations.

In 2018, the central authority also proposed a national cryptocurrency to facilitate international trade. In January 2023, the CBI stated that the crypto-rial was past its pilot stage. The CBDC (Central Bank Digital Currencies) entered its trial phase in early March 2023.

Starting January 2025, the CBI, through a government-controlled API (Application Programming Interface), resumed fiat-to-crypto transactions, increasing state supervision of digital asset exchanges.

Iranian exchanges processed nearly $3 billion in crypto transactions in 2022, with the Iranian Nobitex handling 87% of the volume. The government has also worked with Russia on a gold-backed stablecoin for cross-border payments.

Nevertheless, Iran’s energy infrastructure remains fragile due to aging power plants, mismanagement, and international sanctions. Authorities continue to shut down schools and government offices to conserve energy, while fuel shortages exacerbate domestic hardships.

The Iranian rial depreciated by 37% against the dollar in 2024, driving citizens to digital assets as a hedge against inflation. In response, the government abruptly shut down cryptocurrency exchange payment channels in early January 2025, further restricting civilian access to alternative financial instruments. In 2024, Iran had already halted all online cryptocurrency transactions between Iranian cryptocurrency and the rial, due to concerns about inflationary pressures.

One of the main reasons cited for shutting down cryptocurrency exchange payment gateways was to control the currency market and prevent speculation in the Tether market. This move coincided with the record-breaking surge of the U.S. dollar, surpassing 800,000 IRR, leading many to view it as part of the Iranian Central Bank’s efforts to stabilise exchange rates.

Tether, as a USD-pegged stablecoin, has significant demand in Iran. The increased demand for Tether puts additional pressure on the exchange rate. The CBI fears that high demand and exchange activities could contribute to further market instability.

Key Factors Behind the Iranian Crypto New Regulation

Many cryptocurrency exchanges in Iran do not adhere to financial transparency or provide accurate financial statements. This has led to several challenges, including tax evasion (given the high volume of transaction, tax obligations are expected of exchanges. However, evidence supporting widespread adoption is lacking), unauthorised exploitation of user funds (reports suggest that some exchanges have used customer assets for liquidity or investments in other markets), and money laundering (the lack of precise transaction records and anonymous buyer-seller identities creates a favourable environment for illicit financial activities).

Moreover, reports indicate that some payment facilitators, responsible for instant settlement of exchange transactions, have breached banking regulations. These violations include establishing illegal infrastructures for instant settlements, speculating in the Tether market and artificially inflating its price, lack of transaction transparency and the use of anonymous accounts.

Geopolitical Scenario

• Local Scenario: Iran faces severe economic challenges, including inflation, power shortages, and declining public trust in state financial institutions. The growing interest in cryptocurrency reflects both a hedge against economic uncertainty and an alternative means of conducting business. By implementing regulatory measures, the Iranian government aim to balance economic opportunities presented by crypto with tighter control over financial transactions, particularly to prevent capital flight. The digital rial project, expected to function as state-backed electronic cash, is central to Tehran’s plan to digitise financial operations while maintaining strict oversight.
• Regional Scenario: Iran allegedly collaborates with Russia on a gold-backed stablecoin to facilitate international trade and circumvent sanctions. Regional energy dynamics play a crucial role in the Islamic Republic’s mining policies. Despite vast energy resources, Iran struggles with domestic distribution, while illicit crypto mining places additional strain on an already fragile system. The country’s legal framework on cryptocurrency may influence neighbouring countries, particularly those seeking to regulate digital finance without losing state control.
• International Scenario. The United States and European countries closely monitor Iran’s cryptocurrency activities, particularly as they relate to sanction evasion and illicit financial transactions. The involvement of major Iranian banks in blockchain projects (Kuknos and Borna) raises concerns about alternative financial systems that may facilitate sanctioned transactions. Tehran’s adoption of a central bank digital currency aligns with global trends in digital finance, though its implementation remains geared toward enhancing state control rather than fostering financial decentralisation.

Conclusions

The Iranian government’s strategy toward cryptocurrency reflects a broader attempt to harness digital financial tools while maintaining strict control. The simultaneous expansion of regulatory oversight and restriction of decentralised transactions shows an effort to integrate digital assets into the state-controlled financial system. However, challenges such as power shortages, enforcement of mining regulations, and the potential for capital flight persist.

Domestically, the crackdown on illegal mining operations reflects an ongoing struggle to balance economic innovation with energy security concerns. The government is trying to control the currency market and prevent speculation, avoid lack of financial transparency in exchanges and violations by payment facilitators.

The closure of exchange payment gateways has sparked widespread concern among users. Economic stakeholders argue that, rather than controlling the currency market, this measure will exacerbate existing problems and expand underground markets. They have urged the central bank to adopt a cooperative rather than confrontational approach.

Contact us at info@specialeurasia.com and request our monitoring products or consulting services about Iran.