According to recent reports, the government of Iran has directed miners in the country to sell BTC to the state government in order to pay for imports. If it is true then it will be the first time that a government is using Bitcoin directly to purchase goods.
Government’s Initiative to Evade Sanctions
The Iranian government has taken the decision to use Bitcoin for imports as the US has imposed further sanctions. Its economy has suffered much after international authorities have imposed further restrictions and sanctions on Iran.
Iran is one of the largest countries which have the largest reserves of natural gas and crude oil. The daily oil production capacity has reduced from 3.1 million barrels to just 1.9 million barrels as a result of the economic crash due to the effects of the Coronavirus pandemic and international sanctions.
In order to tackle the economic breakdown and to maintain the inflow of imports into the country, the Central Bank and Ministry of Energy proposed new legislation that will make it necessary for miners to sell BTC to the government.
In August 2019, the government of Iran gave the legal status to the mining of cryptocurrency in the country. But the miners were asked to get a license from “the Ministry of Industry, Mine and Trade.”
Crash of Foreign Reserves
In the previous 24-months, the foreign reserves of the country have reduced by 33%. It has also moved from the US dollar towards the Chinese yuan for a primary reserve currency. Fiat currency behaves and works differently from Bitcoin, which is the reason why the central bank is turning to a decentralized currency called Bitcoin. After new legislation, the country will pay international traders via Bitcoin for imports.
Over the new initiative regarding Bitcoin, the Iranian government has not shared full details over it, but the central bank has stated it would be mandatory for miners to sell BTC to the state. Green signal over Bitcoin on the part of the Iranian government is one of the major factors that driving price value upward.