Iran Becomes First Country To Use Bitcoin As a Medium of Exchange

Following new sanctions by the United States Treasury Department earlier this week, Iran now hopes to use Bitcoin for cross-border settlements, local media reported Thursday.

The Iranian government amended its crypto regulations so that miners can redirect cryptocurrencies to Iran’s finance mechanism for international trades as the country’s fiat currency continues to suffer from both the US sanctions and the coronavirus pandemic.

Iran Wants Only Legally Mined BTC

The amended legislation was a joint proposal by the Central Bank of Iran (CBI) and the Iranian Ministry of Energy, Iran Mail wrote, citing a report from The Islamic Republic News Agency (IRNA).

The regulation stipulates that only legally mined cryptocurrency in Iran will be used for financing imports from other countries. This means that crypto miners are obligated to sell mined BTC directly to Iran’s central bank.

“The miners are supposed to supply the original cryptocurrency directly and within the authorized limit to the channels introduced by the CBI,” the report said.

The legal cap for each miner would be based on the level of subsidized electricity they consume in their mining operations and instructions from the Ministry of Energy.

Bitcoin trading was illegal in Iran until August 2019, when the government released a regulatory framework for cryptocurrencies. Since then, the country has kept an open mind towards cryptocurrencies. The government even provided exclusive energy for miners to encourage crypto mining operations while also discouraging illegal mining.

After issuing more than 1,000 licenses for bitcoin and crypto mining gear in January, the government announced last month that it is offering three power plants to miners in the country.

Evading US Sanctions

With the US dollar acting as a vehicle currency in the global market, Iran believes using bitcoin will help them boycott all the restrictions imposed by the Trump administration.

This makes Iran the first country in the world to officially declare bitcoin as an international medium of exchange. Meanwhile, other countries are hard at work researching or developing a central bank digital currency.