Iran's Banks Banned From Crypto

Conor Maloney
  • The central bank has cited concerns that crypto could be used for money laundering
  • The bank has referred to crypto currency as volatile and a "pyramid scheme" in the past. 

Iran's central bank has been outspoken against decentralized cryptocurrencies since February when they rejected  Bitcoin in favour of their own centralized, regulated cryptocurrency.

The bank denied reports that it would be addopting Bitcoin after being cut off from the SWIFT system recently, saying:

The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme have made the market of these currencies highly unreliable and risky.

Central Bank of Iran

Today the Central Bank of Iran has taken things a step further by banning all domestic banks and credit institutions from any dealings in cryptocurrency whatsoever, stating that all cryptocurrencies had the capacity to be used for money laundering and terrorism. 

“Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them.”

Central Bank of Iran

Iran's national fiat currency is in crisis after the US began sanctioning Iran and presssuring other countries to comply, limiting trade and causing the rial to plummet in value, hitting an all-time low earlier this month. The sanctions may well be renewed in mid May, which will cause even further financial instabiliy in the country.

The financial crisis may be one of the factors in the decision to ban financial institutions from working with crypto outright, although critics of the decision point out that currencies like Bitcoin could be used to alleviate the situation as well.

Services like PayPal and Mastercard are banned in Iran, making cryptocurrency an appealing option, but the recent bank ban will make it more difficult for digital currencies to achieve the same level of adoption being seen in other countries at the moment.

However, the proposed government-backed cryptocurrency may yet provide a solution, with people looking to the Venezuelan Petro token as a measure taken under similar circmstances of sanctions and trade pressures. 

Weekly Newsletter

Cryptocurrencies Are Now Exempt From Value-Added Tax in Country of Georgia

Michael LaVere
  • Country of Georgia has done away with value-added taxation on crypto-assets. 
  • First step in embracing bitcoin and crypto as a currency.

A new bill passed in the country of Georgia will make bitcoin and other crypto-assets exempt from the country’s value-added tax. 

No More VAT in Georgia

According to a report published on Bitcoin.com, the government of Georgia is taking a proactive approach in regulating crypto-asset taxation with a decision that will benefit decentralized currency users. A new bill signed by Georgia’s finance minister Ivane Matchavariani will make crypto-assets exempt from the value-added tax (VAT). 

VAT is a consumption tax placed on top of goods and services whenever value is added. Historically, VAT has been a source of contention and headache for cryptocurrency investors, particularly given the frequency of trading that can occur on most exchanges. The majority of users treat crypto-assets like currency, thereby exchanging them with traditional fiat when market conditions are favorable. 

However, a number of governments regulate crypto-assets like a commodity and are thereby able to impose taxes on value added during the exchange. 

While Europe is the birth-place of the value-added tax, its application to cryptocurrency has been varied. In Germany, crypto is treated as an investment, but capital gains are not imposed on assets held longer than a year. Estonia, on the other hand, does collect capital gains on the profit from crypto investing. 

Legitimizing Crypto

As the report points out, removing the VAT on crypto is one step forward in recognizing and legitimizing the technology as a currency. 

According to the new bill, 

“Cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”

The report also states that, in addition to avoiding VAT, private citizens in Georgia trading cryptocurrencies will not have to pay income tax on their transactions.

Georgia has become a hotbed for cryptocurrency mining given the relatively cheap electricity provided through hydropower plants. However, the new bill does not apply to mining operations, who will still be forced to pay VAT on their earned coins unless registered abroad.  

While the Georgian government is removing one headache for crypto-asset investors, it still does not recognize bitcoin as legal tender in the country--nor any foreign fiat currency.