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. 

Deutsche Bank Strategists Warn of 'Hyperinflation' Generated by Anti-Coronavirus Policies

Michael LaVere
  • Two Deutsche strategists are warning over hyperinflation generated by helicopter money as governments respond to the coronavirus impact.
  • Bitcoin is set to become more scarce in May, when the block reward drops from 12.5 BTC to 6.25 BTC. 

Governments around the world are responding to the economic crisis created by the coronavirus pandemic by printing billions in new money which will result in fiat inflation. This has seen some point out Bitcoin's features, including its limited supply.

According to a report published by ZeroHedge, two Deutsche Bank strategists are warning against the use of “helicopter money,” as central banks rush to print new money and provide economic relief. 

Strategist Oliver Harvey and Robin Winkler published a report claiming that the injection of 'helicopter money' could make the current economic crisis a lot worse. 

The report begins by comparing the impact of cornavirus to the 2008 global financial collapse, 

The economic policy response to the coronavirus looks very similar to the last financial crisis. Central banks have responded with liquidity for the private sector through swap lines with banks and purchases of commercial paper from corporates and have lowered the cost of money through interest rate cuts and quantitative easing.

The authors argue the 2008 crisis was caused by a lack of confidence in the banking sector while the most recent economic collapse is being generated by government policies. The decision to close borders and limit access to business has created a “supply shock” in addition to widespread, if temporary, unemployment. 

The strategists argue, 

If the government tries to keep spending at levels before lockdowns began, while at the same time keeping lockdowns in place, there will be simply more money chasing after significantly fewer goods and services. The result of this will be inflation, and a lot of it.

While the crypto markets are still reeling from their worst day of losses on Mar. 12, the criticism towards fiat inflation policies are coinciding with bitcoin’s looming halving event. At a time when most governments are printing new money at an unsustainable scale, bitcoin is about to become more scarce, providing a potential alternative asset for investors looking to escape fiat. 

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