Sighting concerns relating to money-laundering and other illicit activities, Iran’s Central Bank has asked all its domestic banks to stop dealing in cryptocurrencies, reported Reuters on Sunday, April 22.

The Islamic Republic News Agency (IRNA) reported that the CBI’s central committee has sent a circular to all banks to cut-off all the ties with businesses dealing in the buying, selling or trading cryptocurrencies. IRNA reported CBI claiming in its official circular that digital currencies ‘have the option to be used for money laundering, supporting terrorism and exchange of sums between wrongdoers’.

The IRNA said:

“Banks and credit institutions and currency exchanges should avoid any sale or purchase of these currencies or taking any action to promote them.”

Iran’s government has been deciding on the issue of cryptocurrencies since last December with one of the possible reasons to have a control over its people to trade in foreign currencies.

Iran has been facing a sort of economic meltdown where the price of its own fiat currency ‘Iranian Rial’ has been continuously falling in the open market. In order to ensure more circulation of its currency, the central bank has also issued a permissible limit on the foreign currency to be held by Iranian citizens.

Moreover, there is also a dark shadow of the U.S. sanctions being put on Iran, the fate of which will be decided next month on the 12th of May. In order to circumvent these sanctions, Iran is also considering on issuing a state-owned cryptocurrency, a move recently used by Venezuela by the launch of its Petro which is the country’s state-owned cryptocurrency backed by natural reserves like oil, gas and diamonds.

However, the state-owned currency has its own risks associated with it sighting which Japan’s Central Bank has withdrawn similar such plans.