Iran is yet another country to ban crypto exchanges again based on ideas that bitcoin might further cause the devaluations of Iran’s currency.

Mojtaba Tavangar, the head of the Digital Economy Commission of Iran’s hardline parliament, wrote a letter to President Hassan Rouhani, his ministers and the Central Bank of Iran calling for a complete halt to the use of the rial to buy and sell bitcoin and other cryptocurrencies on crypto exchanges.

Tavangar warned that trading cryptocurrencies could foster large-scale financial scams and fraud – several of which involving traditional assets have dogged the country over the past decade.

His letter followed in the wake of an announcement in February by Iran’s Central Bank Governor Abdolnaser Hemmati that a select number of crypto exchanges would soon be designated strictly to facilitate sale transactions for miners whose coins will be spent to import goods into the country.

Days later, Shaparak, Iran’s payment settlement network under the Central Bank, tightened the noose further, telling local payment facilitating companies to stop offering services that allow “illegal” conduct, including “selling cryptocurrencies, selling VPNs [virtual private networks], and betting and gambling websites”.

The current government stance comes in the wake of bitcoin’s meteoric price rise since mid-December, feeding a growing appetite in Iran for crypto assets after the country’s stock decline last summer.

Enthusiasts and government supporters have opined that crypto trading might also be a way to circumnavigate United States sanctions that have crippled Iran’s economy as bitcoin is not controlled by any government.

Recall that recently, the Nigerian government banned crypto trading in the country majorly because of its inability to control bitcoin and other digital currencies that by design are meant to be beyond government reach.

The latest crackdown on crypto also follows the severe stock market losses in Iran.

Encouraged by government officials, millions of Iranians poured money into the stock market last year, only to suffer huge losses when the equity bubble burst in August 2020.

By contrast, bitcoin has soared in value since August and is currently trading around $57,000, prompting many Iranians to seek their fortunes by trading in it.

Local media, meanwhile, are feasting on narratives of competition for investor capital between Iran’s stock and crypto markets.

Last week, Mohammad Ali Dehghan Dehnavi, who was recently appointed as the head of Iran’s Securities and Exchange Organization after his predecessor resigned, explicitly told Iranians to stay away from cryptocurrencies.

“Instead of investing in places that benefit other countries, the people should invest in the capital market so it would lead to the country’s economic growth,” he said.

Bahman Habibi, chief executive of Iranian crypto exchange Bittestan, disputes the narrative, likening a crypto investment to gold.