Still, Iran’s stringent regulations on digital mining have forced many operators to move to more crypto friendly countries, Amir-Hossein Saeedi Naeeni, a member of the Information and Communications Technology (ICT) Guild Organization’s blockchain commission, said.

Digital mining, due to its rapid global expansion, generated quite a lot of interest among Iran’s IT operators who bought and deployed bitcoin extraction gear in the past two years.

But the enthusiasm was sapped by the government’s introduction of regulatory measures, Saeedi claimed.

“The laws announced by government institutions for crypto mining are very strict in comparison to other industries in the country, causing many miners to stop operating or migrate to the regional countries for investment,” he said.

Saeedi said license tariffs and electricity costs are such that make crypto mining less profitable in Iran, adding they have to be revised and made more transparent along with the regulatory measures.

He touched on the “special” situation of the country which is under the most restrictive American sanctions ever.

“The digital mining industry, beside bringing currency into the country, can facilitate trade where traders can use cryptocurrencies to import goods and bypass payment problems resulting from the banking sanctions,” he added.

Last August, the Iranian government enacted legislation that officially recognized cryptocurrency mining as an industry. The law requires miners to pay an export premium on electricity and prohibits them from mining during peak electricity-usage hours.

Other than that, cryptocurrency trading remains illegal in Iran, meaning the newly-minted coins need to be exported and yields repatriated, making them subject to taxation.

The decision to regulate digital mining came in response to illegal miners who took advantage of the country’s cheap and subsidized energy to set up farms across Iran.
Last summer, officials blamed a surge in activities related to mining of digital currencies like bitcoin for up to seven percent increase in the country’s monthly electricity consumption.

Ministry of energy officials said at the time that the country’s power grid had become unstable as a result of increased mining of cryptocurrencies.

Nevertheless, media reports said last year that Iranian government officials were considering developing a domestic digital currency to counter US sanctions.

Alireza Daliri of the Directorate for Scientific and Technological Affairs of the Presidential Office said a number of domestic knowledge-based companies were working over the project in cooperation with the Central Bank of Iran (CBI).

The head of the company contracted by the CBI to design and develop a national digital currency said then a blockchain and cryptocurrency research lab had been set up in Iran.

Blockchain is a digital ledger or database where transactions in Bitcoin and other cryptocurrencies are recorded.

According to Iranian media reports, a state-backed national cryptocurrency backed by the local fiat unit, the rial, has already been developed but it has yet to be approved for use by the central bank.

Iran’s currency was targeted by the first round of US sanctions imposed in May 2018 after President Donald Trump withdrew from a landmark 2015 nuclear deal.

Under US pressures, the global banking network SWIFT has dropped Iran from its platform, making international financial settlements with the country almost impossible.

Blockchain and other digital ledgers holding cryptocurrency records process transactions without being controlled by any person or entity.

The US government has reportedly warned digital marketplaces that buy and sell bitcoin and companies that sell computers used to process bitcoin transactions to avoid providing services to Iranians.

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The contracts were signed in the Austrian capital of Vienna by an Iranian banking delegation which included representatives of 14 domestic banks headed by Mohammad Khazaei, the president of the Organization for Investment Economic and Technical Assistance of Iran. Deputy Head of the Central Bank of Iran (CBI) for Foreign Exchange Affairs Ahmad Araqchi was also a member of the delegation.

The first major finance deal worth €1 billion was signed on Thursday between Austria’s Oberbank and a dozen Iranian banks. The Austrian bank thus became one of the first European financial institutions to break the ice in providing loans for Iranian projects following the removal of Western sanctions in early 2016.

Oberbank, Austria’s seventh-biggest bank, with a balance sheet of roughly €20 billion ($24 billion), signed the deal with 14 Iranian banks at its headquarters in Linz.

President of the Organization for Investment, Economic and Technical Assistance of Iran Mohammad Khazaei (2nd L) and Oberbank’s Chief Executive Franz Gasselsberger (2nd R) attend a press conference following the signing of a major finance deal between 14 Iranian banks and the Austrian bank in Vienna on September 21, 2017.

The move was groundbreaking particularly given that many banks — mainly those from Europe — are still standing away from Iran’s funding prospects over fears that they may fall afoul of remaining US sanctions against the Islamic Republic.

Officials in Tehran are hoping that this would set the stage for similar moves by other European banks in the near future.

The Iranian signatories included veteran private banks such as Parsian Bank, Saman Bank, Eqtesad Novin Bank, Bank Parargad, Karafarin Bank and the newly established Middle East Bank. Others were former state banks that were privatized over the past few years such as Bank Melli Iran, Bank Mellat, Bank Sepah, Tejarat Bank, Bank of Industry and Mine, Export Development Bank of Iran, Refah Bank and Keshavarzi Bank.

The agreement which envisages a funding ceiling of €1 billion covers projects by Austrian companies in Iran’s production and development projects lasting more than two years.

Speaking on the sidelines of the signing ceremony, Oberbank’s Chief Executive Franz Gasselsberger said, “Today was a great day in the two countries’ relations as this was the first finance deal between a European bank and the Islamic Republic of Iran. Although the negotiations on the deal took long for several months, the outcome was quite favorable and satisfying for both sides.”

He added the contract will prepare the ground for Austrian companies and industries in different sectors, particularly health and infrastructure, to invest in Iranian projects and export products and modern technologies to the Middle Eastern state.

“In case on some day in the future, we look back at this day, we will realize that this contract has served as a turning point for the two sides to deepen their relations.”

Gasselsberger said Iran’s economy, in addition to those in Austria and other European countries, is extremely attractive for the entire world as the Middle Eastern state has a hardworking and smart young generation that can create great opportunities for their own country and other nations.

“There must be a win-win situation for Iran and international companies. Nevertheless, we should not forget about political aspects.”

Earlier in September, Gasselsberger told Reuters that the agreement covered projects by Austrian companies in areas that were previously under sanctions.

“We have very concrete projects in the fields of infrastructure, rail, health, hospital construction, factory building, photovoltaics, hydro power,” he had stressed.

Export credit guarantees covering 99 percent of a project’s volume will be provided by the Oesterreichische Kontrollbank, the main Austrian body that issues them, Reuters added.

“The sticking point was obtaining an additional guarantee from the Iran,” Gasselsberger said. “We negotiated with the Iranian central bank but the guarantee is evidently coming from the Iranian Finance Ministry.”

President of the Organization for Investment, Economic and Technical Assistance of Iran Mohammad Khazaei (C) at the signing ceremony of a finance deal worth €500 million with representatives (R) of Denmark’s Danske Bank in Vienna on September 21, 2017.

Deal with Denmark’s Danske

The other finance contract, very similar to the one with the Austrian bank, was also signed on Thursday, between the Iranian team and Denmark’s Danske Bank.

The deal is worth €500 million and sees 10 Iranian banks on the receiving end. Following the contract the Danish bank became the second European lender to ink such an agreement with Iran.

The Iranian signatories to the agreement were Saman Bank, Bank Mellat, Tejarat Bank, Bank Melli Iran, Bank of Industry and Mine, Bank Sepah, Bank Pasargad, Eqtesad Novin Bank, Keshavarzi Bank, and Parsian Bank.

They will act as the agent banks, providing civil projects in Iran with the Danish fund, according to an announcement by the website of the Central Bank of Iran.

Danske Bank, founded in 1871 and headquartered in Copenhagen, is the largest bank in Denmark and a major retail bank in the northern European region with over five million retail customers. It was number 454 on the Fortune Global 500 list for 2011.

MoU on infrastructural projects

In addition, the Iranian delegation also signed an MoU late on Thursday with the EKF Bank of Denmark to finance infrastructural projects in Iran.

The memo will make it possible to finance Iranian projects in various sectors later.

The deals with Oberbank and Danske came on the heels of a similar move between China’s CITIC Group and a consortium of Iranian banks to provide loans worth a collective of $10 billion for the country’s infrastructure projects.

Iran had also in late August secured an €8-billion credit line from South Korea’s Eximbank — what was seen as the country’s biggest loan deal since the removal of sanctions against it in early 2016.

Accordingly, officials in Seoul said the deal would finance projects in Iran by companies from South Korea.

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Gholamali Kamyab said attracting $10 billion of foreign finance has been defined as a project for the CBI in the area of Resistance Economy, Tasnim News Agency reported.

He made the remarks in a meeting with CBI officials, which was attended by First Vice-President Es’haq Jahangiri in Tehran.

The measures taken by the CBI in this regard include extensive talks with some foreign banks, such as the Export–Import (Exim) Bank of China, Italy’s Mediobanca and Denmark’s Danske Bank, he noted.

The CBI vice governor added that up to now, 72 percent of the project has been implemented.

There has been a new wave of interest in ties with Iran since Tehran and the P5+1 group of countries – Russia, China, the US, Britain, France and Germany – reached a deal on Iran’s nuclear program in 2015.

The comprehensive nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), terminated all nuclear-related sanctions against Iran.

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Nahavandian made the proposal to the Swedish Minister of Finance Magdalena Andersson and the Minister of EU Affairs and Trade Ann Linde in separating meetings in Stockholm on Saturday, Fars News Agency reported.

During the meetings, Nahavandian underlined the need to accelerate the trend of promoting Tehran-Stockholm relations through a comprehensive program.

He said the two countries should finalize the banking talks at the earliest to facilitate economic exchanges.

The Iranian government, he said, is resolved to attract optimum foreign investment.

For her part, Linde said that her country has planned for promoting economic relations with Iran.

Andersson also said in her meeting with Nahavandian that Stockholm attaches great importance to ties with Tehran.

Andersson further stressed that Sweden and Iran should resume cooperation as Tehran was once Sweden’s biggest trade partner before the sanctions’ era.

In relevant remarks in early June, Swedish Foreign Minister Margot Wallstrom in a meeting with her Iranian counterpart Mohammad Javad Zarif in Stockholm called for the expansion of relations between the two countries.

“There is a need for enhanced cooperation between Iran and Sweden under present conditions,” Wallstrom said.

The Swedish foreign minister reiterated that following the nuclear agreement between Iran the six world powers (the US, Russia, China, France, Britain and Germany) in July 2015, the time is ripe for Iran and Sweden to expand all-out relations.

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Bloomberg has quoted an unnamed official from the Central Bank of Iran (CBI) as saying that the financing will be provided to the Islamic Republic through Germany’s state-run lender KfW IPEX. The official added that it would be used for the development of the railway from Tehran to Mashhad.

The funding has been agreed in principle and is close to being finalized, Bloomberg quoted Michael Tockuss, chairman of the Germany-Iran Chamber of Commerce, as saying. It would be the biggest credit line Iran has secured from foreign sources since the easing of sanctions in January, he added.

The announcement comes only a few days after the tragic crash of two trains on Tehran-Mashhad railway left dozens dead and many wounded. The crash was blamed on human error but nonetheless revived a debate at home that the country’s ageing rail fleet needs to be renovated.

Germany’s Siemens has already announced serious plans to help develop Iran’s railway system. Local media reported earlier this year that the company had signed several agreements with Iran to develop its railway network, including the electrification of the Tehran to Mashhad line. Also, officials in Tehran said earlier this month that talks were underway with Siemens to acquire high-speed trains from the company through 30-year leasing deals.

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The Governor of BHF-Bank Hans- Günter Wiesenack said several opportunities exist for collaborations and the German bank seeks to strengthen monetary ties with Iran.

He recalled barriers to deepening relations with Iran during sanction years adding “tough days are over and constructive cooperation has become an attainable goal.”

“So far, several sessions have been held between BHF-Bank and Central Bank of Iran (CBI),” underlined Wiesenack suggesting 30 to 40 years of cooperation with the Iranian IMIDRO.

The official stressed that formation of a metal department in the private banking company has elevated level of international relations.

Head of Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) Mehdi Karbasian, for his part, referred to inking of documents for cooperation between Iran and a number of European companies during President Rouhani’s earlier visit to Europe and removal of problems with French Kofas and German Hermes companies saying “many earlier financial challenges are now resolved.”

He went on to note that mining and mineral sectors of Iran have numerous plans on the agenda of the coming five years which highlight the importance of banking sector as well as financial and insurance sectors.

“A total of 30 billion dollars of projects have been defined for the mine and mining industries,” underscored Karbasian voicing the country’s readiness to absorb the capital in order to finance the projects.

He pointed to the positive background of the German bank will make a more serious presence in Iranian projects in order to prevent delays.

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Oman’s Bank Muscat SAOG, Woori Bank of South Korea and India’s UCO Bank Ltd. are all in the process of establishing a presence in Tehran, CBI Vice Governor Peyman Qorbani said Tuesday in an interview. He declined to give further details, Bloomberg wrote.

Major European banks have kept their distance from Iran, despite its nuclear deal with world powers, for fear of running foul of remaining US sanctions.

Central Bank of Iran Governor Valiollah Seif said progress with foreign banks has been “slow,” IRNA reported in September.

Austrian and Iranian bankers met in Vienna in September to discuss the resumption of trade financing, people with knowledge of the plans said at the time.

Austria’s top three banks, Erste Group Bank AG, UniCredit Bank Austria AG and Raiffeisen Bank International AG would be among the participants, according to the people, who asked not to be identified.

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The Export Guarantee Fund of Iran (EGFI) signed the agreements in Lisbon on the sidelines of the annual meeting of Bern Union — an association of private and state export credit insurers from around the world, IRNA reported Wednesday.

Under the agreement, the Iranian and European sides will cooperate on “exchange of economic, trade and banking information, reinsurance coverage, coinsurance, and training”.

IRNA quoted EGFI Managing Director Kamal Seyyed-Ali as saying that European export credit insurers were increasingly interested in financing projects after the lifting of sanctions on Iran.

“Given our good track record in repayment of finance installments and Iran’s foreign exchange reserves and the nonexistence of outstanding debts, these institutions are interested in the Iranian financing market despite the problems created by the US Treasury,” he said.

Banks and financial institutions are holding back on moving into Iran because they are fearful of falling foul of American sanctions against the Islamic Republic.

Iran paid off its debt of about €500 million to Hermes

Iran paid off its debt of about €500 million to Hermes, Iranian Ambassador in Berlin Ali Majedi said in June, clearing the way for the resumption of insurance services.

Hermes, which extends insurance coverage to Iranian exports, has been encouraging German banks to normalize ties with Iran.

Last month, the Central Bank of the Islamic Republic of Iran (CBI) said Austrian export credit agency OeKB had raised its cover for Iran transactions to one billion euros.

Raiffeisen Bank and Erste Bank from Austria along with banks from Italy, Switzerland, Germany, Turkey and Belgium have set up shop in Iran, handling transactions with the energy-rich country while major banks have stayed away.

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The announcement by Austrian Finance Minister Hans Jörg Schelling came during a meeting with CBI Governor Valiollah Seif in Vienna, Mehr News Agency reported.

“In the meeting, it was announced that OeKB’s insurance cover for exports to Iran has increased to 1 billion euros from 280 million euros,” reported the news agency quoting a CBI statement.

Schelling also said his country is interested in “completing banking relationship” with Iran and taking measures to remove obstacles, besides forging brokerage ties with Iranian banks, it added.

Iranian President Hassan Rouhani (R) welcomes Austrian President Heinz Fischer during a visit to Tehran in September 2015.

Banking ties

The governors of the two nations’ central banks, Ewald Nowotny and Seif, met on Tuesday, according to sources, who asked not to be identified because the talks are private, Bloomberg reported.

Top three Austrian banks: Erste Group Bank AG, UniCredit Bank Austria AG and Raiffeisen Bank International AG are among the participants, the sources said.

Raiffeisen has been looking into the option of reopening its office in the country, Chief Executive Officer Karl Sevelda said in January.

Austrian and Iranian bankers met in Vienna on Wednesday to discuss the resumption of trade financing, people familiar with the discussion said.

Austrian companies became the first Western firms to put down concrete stakes in the Islamic Republic when Tehran reached a nuclear accord, signing a number of agreements with Iranian partners in September 2015.

Raiffeisen Bank and Erste Bank from Austria along with banks from Italy, Switzerland, Germany, Turkey and Belgium have set up shop in Iran, handling transactions with the energy-rich country while major banks have stayed away, Press TV said./ IRAN-Daily

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South Korea announced on Thursday that it will start a euro-based settlement system for trade with Iran next week.

The move follows the removal of sanctions against Iran in January and is expected to help the two countries further expand economic relations.

“The euro-based settlement system for South Korea-Iran trade will start on August 29,” South Korea’s Finance Minister Yoo Il-ho told reporters after a policy meeting held in Seoul. “The opening of the system will help further promote bilateral trade and investment,” Yonhap News Agency quoted him as saying.

Iran and South Korea have been using a won-based settlement system since September 2010 to bypass trade sanctions and allow the two sides to conduct trade.

Under the current system, two local banks — Woori Bank and the Industrial Bank of Korea — have their own accounts at the Central Bank of Iran (CBI), and trade payments are made through the accounts.

The South Korean government has made efforts to set up a new settlement system as an alternative method that can possible expand trade and investment with the oil-rich country, Yonhap added.

The finance minister said KEB Hana Bank, Shinhan Bank and Woori Bank will handle the euro-based payment system, which uses the euro as a medium of trade, which is widely preferred by Iranian companies.

Industry data showed that the trade volume between Korea and Iran stood at $6.1 billion in 2015, down sharply from $17.4 billion in 2011 in what appears to have been a result of sanctions against the Islamic Republic.

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