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Iran Central Bank Bans Transactions In Cryptocurrencies

A Bitcoin mining site in North Khorasan Province, Iran
A Bitcoin mining site in North Khorasan Province, Iran

The Central Bank of the Islamic Republic of Iran says creating payment networks based on cryptocurrencies is against the law.

This comes while some Iranian authorities including the Ministry of Telecommunications and Information Technology have said "mining" bitcoin and other cryptocurrencies is a legitimate activity although "miners" need to pay for the high amount of electricity they consume.

The Central Bank has said in a statement on Wednesday July 10 that it is the only authorized body in Iran that can mint currencies and handle payment networks.

Meanwhile, the CBI has threatened that it reserves the right to take legal action against cryptocurrency miners.

Earlier, Iranian authorities had said bitcoin mining and dealing in cryptocurrencies are authorized but those active in this business need to get a license from the government.

On the other hands, others have expressed concern that bitcoin mining can impose a heavy burden on the country's electricity grid.

Bitcoin mining requires the use of vast networks of powerful computers, which in the end can prove too expensive to make significant money from the mining operation. In Iran, electricity is subsidized and also very cheap in foreign currency, since the Iranian rial has lost its value fourfold in the last 18 months.

Regardless of the absence of specific laws about cryptocurrencies, reports from Iran say hundreds of bitcoin mining machines have been confiscated in several Iranian cities during recent weeks.