Iran’s stricken economy is pushing millions of citizens into the world of cryptocurrencies, but the government is stepping up its clampdown. As the Iranian rial hits all-time lows and inflation passes 40%, authorities are cracking down on crypto exchanges and trading with new restrictions in a bid to stabilize the domestic currency.
In a shock decision last month, the Central Bank of Iran (CBI) stopped rial payments for every cryptocurrency exchange. This move, which came as a surprise to more than 10 million users of crypto, made it impossible for them to trade Bitcoin and other foreign digital currencies using the rial. The government says the move is to decelerate the depreciation of the rial, which has been free-falling since years of mismanagement, severe Western sanctions, and perpetual political uncertainty.
The value of the rial has fallen to more than 940,000 against the U.S. dollar, a stark reversal from under 600,000 in late 2024 and under 40,000 in 2018. While the currency goes into freefall, millions of young Iranians are finding refuge in crypto as a lifeline amid an isolated economy that is still cut off from the global money system.
Central Bank Asserts Control
The recent moves by the CBI represent a broader bid by the Iranian government to reclaim authority over the rapidly expanding crypto market. In a secret session with government, judiciary, and parliamentary officials, CBI Governor Mohammad Reza Farzin was given “full authority” to regulate and control cryptocurrency markets. President Masoud Pezeshkian strengthened this stance, proclaiming the central bank the sole authority for the crypto market.
Even with such broad powers, the CBI has come under fire for not being transparent. It has largely stayed mum about the contents of the new regulations, declining to explain its rulings to the public or answer questions from news organizations such as Al Jazeera.
Among the proposals being considered are putting daily limits on cryptocurrency rial price volatility, especially that of Tether (USDT), a dollar-stablecoin that is widely used by Iranians as a hedge against inflation. Should the value of USDT appreciate by more than 4% in one day, traders would be temporarily shut out of buying it. The central bank is also coercing exchanges to provide authorities in real time with access to users’ data and reserves, which has worried about privacy invasions as well as government excess.
Ripple Effect on Exchanges and Users
The sudden rial-based crypto payment ban has compelled smaller exchanges to oblige the new policies or shut down operations. Limited rial payment gateways have been reinstated by some exchanges through the submission of proof of reserves, while others are negotiating conditions with the CBI. Meanwhile, users have resorted to alternative means, including processing through unofficial bank accounts.
Although incoming and outgoing cryptocurrency transactions are left untouched, critics say that the policies will push more individuals towards illegal and unregulated markets. Ubitex CEO Eisa Keshavarz blamed the government for implementing “biased and unethical” measures that victimize common people. “I believe it is the people’s inalienable right anywhere to turn their hard-earned money into gold, greenbacks, crypto, housing or anything to preserve their purchasing power,,” he said, adding that limiting policies are alienating the public from the government.
Taxation and a New Wave of Restrictions
The CBI’s latest moves are part of a broader strategy to regulate the crypto sector. Observers believe that Iran’s widening budget deficit may prompt the government to impose taxes on crypto transactions. The Supreme Council of Cyberspace, Iran’s top internet governance body, recently released a regulatory roadmap that hints at stricter controls, including a focus on “active control and countermeasures” to manage the risks of global cryptocurrencies.
Although the roadmap refers to enabling foreign trade via crypto, there are warnings that this would open Iranian traders to blacklisting by global exchanges. Saeed Khoshbakht, a researcher in blockchain, said that mentioning “minimizing risks” could mean putting state interests ahead of citizens’ well-being. “If they said minimising risks for citizens, at least some level of support could be envisioned. But without this word, ‘minimising risk’ appears focused on the state rather than the people, and this means a host of new restrictions masked as control and management,” he added.
A Troubled Future for Crypto in Iran
The Iranian government’s response to crypto has been unpredictable for years. It legalized crypto mining in 2019, but miners were regularly pushed out by power shortages and other limits. Recently, the Ministry of Culture and Islamic Guidance prohibited media organizations from advertising cryptocurrencies as threats to the public. These moves, in addition to the central bank’s crackdown, have put Iran’s crypto community into a precarious future.
As the government tries to take its grip tighter around the industry, millions of Iranians find themselves scrambling for means to preserve their wealth and stay financially afloat. For some, cryptocurrencies are not only an investment but also a lifeline in a failing economy. With the state, however, putting more emphasis on control than on the welfare of the people, the division between the people and the government is only likely to increase.
