On January 4, the state-run Entekhab website reported that the Central Bank of Iran had abruptly shut down portals for digital currency exchanges without prior notice or preparation. According to the CEO of Iran’s Blockchain Association, this decision threatens to devastate numerous businesses reliant on cryptocurrency trading. Entekhab further warned that shutting off legitimate channels for cryptocurrency transactions could drive activity underground, fostering illegal operations.
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A Revolutionary Guard Monopoly
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Since the late 2010s, cryptocurrency mining in Iran has been monopolized by the regime’s Revolutionary Guards. This latest move to ban cryptocurrency exchanges consolidates their control over digital currency markets. The timing of this decision is revealing, as Iran’s economy faces bankruptcy, severe sanctions, and dwindling resources. Controlling the lucrative cryptocurrency sector appears to be a strategic lifeline for the regime, but it comes at a significant cost to ordinary citizens and businesses.
Dependence on Digital Platforms
Digital platforms, including cryptocurrencies, play a critical role in the lives of millions of Iranians. A report by the state-run media outlet Etemad underscores the scale of this dependence:
- Instagram, a widely used platform for small businesses, supports 7.1 million enterprises and sustains the livelihoods of 11 million Iranians.
- Comparatively, the automobile industry, a cornerstone of Iran’s traditional economy, accounts for just 200,000 direct jobs.
- Starting an online business typically requires only 20 to 30 million tomans in capital, far less than the 1.4 billion tomans needed to establish an industrial job.
The report highlights the transformative potential of the digital economy in Iran, offering low-cost entrepreneurship opportunities and a safety net for those excluded from traditional employment or government support due to political or economic barriers.
Economic Impact of Internet Restrictions
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The state-run Jahan-e Sanat newspaper has previously detailed the catastrophic economic impact of internet shutdowns on Iran’s digital economy. A September 2022 report by NetBlocks estimated that internet disruptions cost Iranian businesses $1.5 million per hour. With over 10 million microbusinesses operating on Instagram alone, these interruptions have ripple effects on livelihoods. The Iranian Statistics Center revealed that 11 million people earn their income through virtual networks, with 83% of them relying on Instagram as a primary source of revenue.
The Social Cost of Economic Decisions
The regime’s latest decision to shut down cryptocurrency exchanges is another blow to a population already grappling with widespread poverty. According to Ebrahim Sadeghifar, head of the Institute of Labor and Social Security, 22% to 27% of Iranians live in poverty, struggling to meet basic needs. He remarked, “Poverty in Iran is no longer a marginal issue but an undeniable reality affecting a large portion of society.”
Conclusion
Iran’s crackdown on cryptocurrency exchanges exemplifies the regime’s prioritization of control over economic growth and citizen welfare. By stifling digital innovation and closing avenues for entrepreneurship, the government risks exacerbating poverty and pushing more Iranians into economic desperation. As the digital economy emerges as a lifeline for millions, policies that undermine this sector will have far-reaching consequences for both individuals and the nation’s economic future.
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