A combination of economic sanctions, high foreign currency demand, and an improved regulatory environment have sent the price of Bitcoin Core (BTC) skywards in Iran.
On Wednesday, the price of BTC in Iran rose sharply after the government’s approval of the plans to mainstream Bitcoin mining and as the local currency nosedived.
BTC reached a record high of $24,000 on the Iranian exchange EXIR, surpassing its recent high of $20,000, as investors piled into the cryptocurrency in a hunt for a haven against the falling rial.
“Bitcoin bull markets already started in Iran as rial price goes down against USD,” EXIR tweeted. As per a Reuters report, the rial trades at approximately 138,000 against the USD on the streets of Tehran, around 230% higher than the official rate of roughly 42,000.
Iran announced on Tuesday that within three weeks, it would officially start to recognize mining of Bitcoin and other coins as an industry. The Secretary of Iran’s Supreme Council of Cyberspace, Abolhassan Firouzabadi, said that the Central Bank of Iran would draft a policy framework for the industry.
Firouzabadi told the news agency IBENA, which is affiliated to the Central Bank of Iran, that deepening cryptos’ use is envisaged to seamless trade between Tehran and its partners, particularly during the wake of renewed US sanctions. “But the final policy for legislating it (crypto mining) hasn’t been declared yet,” IBENA stated.
BTC’s price in Iran widely reflects the difference between the official exchange rate and the one on the street, an indicator of increasing inflationary pressures in an economy under US sanctions. At $24,000 BTC in Iran is trading at a premium of roughly 240% to the world average. At press time, Coinmarketcap.com quoted Bitcoin at $7,017.
As per an EXIR tweet, the price in Iran spiked around 40% over the last three weeks, rising way quicker than the global average. It is not a rout, but the dipping rial alongside some speculation and changes in Bitcoin policy has prompted a spike in demand.
Being one of the world’s largest oil producers, Iran is looking to leverage digital currencies to compensate for the supposed squeeze in petrodollars arising from US economic sanctions intended to cut oil sales from the nation, the economy’s lifeblood.
Iran is not the only nation to try and utilize cryptos to deflate the impact of economic sanctions. Venezuela issued a national cryptocurrency in February, which it claimed is backed by oil. However, the petro appears to have run into trouble. According to media reports, the coin has found no takers, and the oil that was supposed to back it up is not present. In response, the US banned its citizens from investing in the petro.