EghtesadOnline: The Central Bank of Iran on Thursday warned against rampant trade in cryptocurrencies following the deep recession in parallel asset markets.
In a notice published on its website, it strongly recommended the people to avoid trade in digital currency, warning once again that such trade is prone to risks and that the CBI has no responsibility toward potential losses.
“It is highly recommended that people avoid deal in crytpos… traders would be accountable for ensuing risks.”
The CBI recently opened a banking system to limited crypto payments under special conditions and available only to cryptocurrencies mined legally in Iran.
Referring to an earlier government decision, the CBI said legally mined crypto can be used for paying import bills. Such deals are allowed only via banks and selected exchange shops.
The latest warning comes at a time when cryptocurrencies are becoming increasingly popular among Iranians disappointed by the sluggish bourse and the pattern of decline in other financial markets.
Hit hard by the nonstop selloff and large scale capital outflow, the once highly lucrative share market is fast losing traction with investors. The main index of the Tehran Stock Exchange, TEDPIX, plunged 50% in the past few months and efforts to rescue the market have been futile.
While there are no reliable figures for crypto trade in Iran, some estimations are staggering. Mohsen Alizadeh, a member of the High Council of Securities and Exchange, the stock market policymaking body, said 1,500 trillion rials ($7 billion) has exited the stock market via major shareholders and institutional traders.
“The capital outflow is traceable. Liquidity has flown into parallel markets, including digital currency,” he was quoted as saying by ILNA.
Recalling the high risks surrounding crypto trade, Alizadeh pointed to propaganda in social media to lure retail investors involved in the bourse to crypto markets.
In the absence of powerful rival markets, investors are apparently attracted by the high rewarding cryptos. Starting a steady rally in Oct 2020, the Bitcoin, the world's biggest crypto asset, has touched new highs.
It crossed $20,000 in Dec 2020, $40,000 in January 2021 and hit $50,000 in February. In mid-day trading Friday, the currency of virtual value was worth $56,000. Its all-time high is $64,829 and it has a market cap of around $1.07 trillion, CoinDesk reported.
Following the unilateral US withdrawal from the Iran nuclear deal and imposition of sanctions in 2018, experts proposed that the CBI allow use of high-tech to evade the economic blockade imposed by Donald Trump, the controversial former US president, now facing criminal investigations and lawsuits.
The government in Tehran has recognized mining cryptocurrency as a legal industry and recently ratified procedures for legally mined cryptocurrency to be used for imports.
The fast-pacing crypto popularity has compelled governments to explore the prospects for using digital currencies. In Iran the central bank insists on crypto restrictions while the parliament has a different view.
In mid- April, head of the Majlis Economic Commission, Mohammadreza Pourebrahimi, said MPs are trying to develop a legal framework to allow trade in cryptocurrency and the commission has conducted research to this effect.