• 147 days Could Crypto Overtake Traditional Investment?
  • 152 days Americans Still Quitting Jobs At Record Pace
  • 153 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 157 days Is The Dollar Too Strong?
  • 157 days Big Tech Disappoints Investors on Earnings Calls
  • 158 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 159 days China Is Quietly Trying To Distance Itself From Russia
  • 160 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 164 days Crypto Investors Won Big In 2021
  • 164 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 165 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 167 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 167 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 171 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 172 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 172 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 174 days Are NFTs About To Take Over Gaming?
  • 174 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 178 days What’s Causing Inflation In The United States?
  • 179 days Intel Joins Russian Exodus as Chip Shortage Digs In
Are NFTs About To Take Over Gaming?

Are NFTs About To Take Over Gaming?

Gamers are spending billions on…

  1. Home
  2. Cryptocurrencies
  3. Other

Iran Bans Crypto Amid Currency Crisis

Rial

With a decision over the renewal of U.S. sanctions looming large in early May, the Iranian central bank has moved to ban all domestic banks from trading in cryptocurrencies, unify the fiat currency exchange rate and cut exchange houses out of the mix. 

While the crypto move is purportedly designed to avoid entanglement in money-laundering and terrorism-financing. More significantly, Iran is bracing for a currency crisis and is trying to avoid any further degradation of the rial, which has hit unprecedented lows.

(Click to enlarge)

Not only has it banned cryptocurrency dealings, but it’s also unified its official and open market exchange rates and banned all money-changing transactions outside of banks in order to prop up the rial.

Since September, the rial has lost almost half of its value on the free market, dropping from 36,000 to the dollar to 60,000 to the dollar last week.

The ban was announced on IRNA, Iran’s official news agency, on April 22. The central bank ban follows a similar ban announced in December by Iran’s anti-money laundering body, saying “banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them”.

In the meantime, the Iranian rial is having a tough time, and those who have grown accustomed to buying foreign currency from exchange offices are increasingly disappointed.

According to Radio Free Europe/Radio Liberty (RFE/RL), many exchanges offices have closed their doors, with signs saying they’re out of U.S. dollars, sparking a nationwide “dollar-buying panic”. Related: Bitcoin’s Breakout Is Not As Bullish As it Seems

The rial’s value is plunging and the panic is intensifying on fears that May 12 will see a renewal of U.S. sanctions on Iran.

The government’s official exchange rate has now been set at 42,000 rials against the dollar, with a cap on the amount of foreign currency that citizens can hold outside banks.

Police are patrolling high-traffic exchange areas to monitor potential under-the-table trades, according to RFE/RL, while exchanges are hoarding dollars and black-market rates are soaring as traders take the streets to defy the government.

Johns Hopkins University economist Steve Hanke described the situation for RFE/RL as “a perfect currency storm”.

Iranian President Hassan Rouhani has long discussed the potential for a unified exchange rate; however, such a move had always been conditioned on the resumption of international banking ties, which are still absent. The ‘perfect storm’ is now being bolstered by speculators or those trying to protect their assets.

According to Seyyed Ali, former CBI deputy for foreign exchange affairs, as cited by Al-Monitor, Iran’s regulatory had “lost the true target market”--travelers, students and others in need of hard currency—before the rate unification because the market was flooded with speculators as unregulated exchange houses had become more prevalent.

Now it’s a game of preventing massive capital flight, which is hard to do when the panic button has been pushed.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment