Iran Moves to Restrict Crypto Exchanges Under ‘Currency Smuggling’ Laws

Iran Moves to Restrict Crypto Exchanges Under ‘Currency Smuggling’ Laws

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The Iranian government just made conduits to cryptocurrency markets riskier, and more confusing, than ever before. 

According to Iranian news outlet ArzDigital, the parliament this week to cryptocurrency in existing “” and foreign currency exchange regulations. The result of this prospective regulation is Iranian entrepreneurs face a heightened risk of being by local authorities or by Americans. 

The law would mean Iranian crypto exchanges must be licensed by the Central Bank of Iran and follow legacy guidelines, although it’s not apparent how existing exchanges should apply for licensing or adapt those to blockchain technology. What is clear is the Iranian government is looking to quell by preemptively justifying any moves to shut down or penalize local crypto exchanges.

However, the Iranian market doesn’t strictly consist of homegrown, over-the-counter traders. Unlike fiat currency exchanges, several crypto operations serving Iran are legally based in other countries. It is unclear how the new licensing guidance applies to decentralized ecosystems. 

For example, the Binance-owned analytics site CoinMarketCap, officially based in the U.S. state of Delaware, listed the token in Q1 2020. CoinMarketCap CSO Carylyne Chan said that “there were no glaring red flags that arose during the application process.” Yet, this clone token is clearly promoted in suspicious ways. Twitter bot researcher Geoff Golberg said the date of new follows indicates “inauthentic accounts were created solely to make their Twitter community appear more robust leading up to being listed by CMC.”

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The crypto exchange UtByte and the KingMoney token project both appear to be registered in Sweden under an umbrella firm called Sweden Invest Group AB, led by Swedish-Iranian businessman Reza Khelili Dylami. (Dylami could not be reached for comment by press time.) Some labeled both these projects as an interconnected “scam.” Regardless, it was obviously to for the purpose of cross-border transactions. 

According to Chainalysis, “UtByte has received about $13.8 million of BTC and has strong transactional connections to Iranian cryptocurrency services and exchanges.”

The about Iranians using cryptocurrency to circumnavigate sanctions appear to be correct. It’s unclear how crypto exchanges would continue to bypass sanctions if, in the future, they are tallied and registered with the Central Bank of Iran. 

On the other hand, even cryptocurrency projects that are fully based in Iran often benefit from foreign social media efforts. For example, over the past weekend Tron founder Justin Sun like on Twitter. 

Cryptoland co-founder said the company is legally based outside of Iran but operates locally. When asked about Cryptoland in January 2020, a press representative for the Tron team said it does not directly work with the Iranian company, that any Farsi-language marketing of crypto projects is done “by the China/Asia team at Tron, not Tron US,” and there is “no actual marketing done” in Iran. 

According to Babak Jalilvand, editor of the leading Farsi crypto blog , there is a “significant” TRX community in Iran precisely because “the Tron team” uses “their marketing skills to attract people.”

Yet, it remains unclear how sanctions would apply to global crypto communities. 

Although he’s not familiar with the Tron Foundation specifically, Dan Newcomb, a compliance expert at law firm , said in January that applicable to Iran apply to any individual or organization doing business in the U.S.

“Marketing in Iran is soliciting business in Iran,” Newcomb said.

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