The Central Bank of Iran has banned banks under its purview from transacting in bitcoin and other virtual currencies in the Islamic Republic.
"The use of Bit Coin and other virtual currencies is prohibited in all monetary and financial centers of the country," the apex bank said in a statement.
The bank sees virtual currencies having the potential to become a tool for money laundering and financing of terrorism.
The central bank has prohibited "all branches and subsidiaries of banks and credit institutions and exchanges" from selling and purchasing cryptocurrencies or act on anything that would facilitate or promote them.
The bank warned that the offenders will be treated in accordance with the relevant laws and regulations.
The ban on cryptocurrencies is seen as an act to shore up its own fiat currency rial, which had hit an all-time low earlier in April. Iran had earlier formally unified its official and open market exchange rates and banned money changing outside of banks in a bid to boost rial.
Meanwhile, the plunging value of the Iranian rial is attributed to the fears that the United States will again impose sanctions on the Islamic republic. The U.S. President Donald Trump is set to decide by May 12 on restoring U.S. economic sanctions on Iran.
In late February, Iran had announced plans to launch a state-backed digital currency, which was viewed as a plan to ease the Islamic Republic 's economic crisis, and circumvent U.S.-led sanctions.
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