Understanding the Nature of the Crypto Currencies and Determining Some of Its Regulatory Requirements in Iran: Islamic Economics Approach

The lag between legislation and technological advances is known as one of the key factors of economic and social crises. Technological advances have sometimes occurred so quickly that it has not been possible to be monitored and legislated and this has led to social conflicts. Because it is impossible to prevent technological advance, legislators need to have a comprehensive understanding of the nature of technological changes and also provide the possibility of innovation as well as preventing abuses. One of these technological advances is related to cryptocurrencies, which are in fact new generation of common currencies. They have helped economic exchanges to be done electronically using peer-to-peer technology, without any central intermediary. These currencies have been in the center of attention due to its many attractive aspects. All the activities such as issuing, processing and verification are done within a network and there is no intermediary or central authority to control it. This characteristic has made the central banks and regulatory institutions unable to monitor these currencies. Legislation in this area requires economic and jurisprudential analysis of these instruments. As financial and monetary markets in Iran are based on Islamic regulation and require jurisprudential approval for their legitimacy, the jurisprudential aspect is important. Findings of this study imply that using cryptocurrencies needs some requirements which included the minimum level of laws to prevent creating money in the process of cryptocurrencies issuance, providing the necessary guarantee for these currencies, developing a mechanism to prevent the price fluctuations, adopting laws for acquisition, transition and receiving cash in exchange for cryptocurrencies to prevent the expanding of shadow economy and also providing the possibility of exchanging them for common currencies.