KRG bans cryptocurrency and Forex trading, citing legal absence, fraud risks, and alignment with Iraq’s long-standing policy against unregulated digital assets.
ERBIL (Kurdistan24) – The Kurdistan Region’s Ministry of Interior of the issued a directive on Sunday prohibiting citizens and commercial entities from engaging in digital currency transactions and electronic financial speculation.
The KRG Interior Ministry said that these activities are legally forbidden, warning that immediate enforcement actions will be taken against violators operating within the region.
The ban formalizes the regional administration’s stance against digital assets and speculative trading platforms.
According to the ministry statement, electronic currencies, including stablecoins such as USDT, and the broader “Forex” trading market lack any recognized legal framework or officially licensed companies in the Kurdistan Region and across Iraq.
The ministry emphasized that the decision was coordinated with national regulatory policies and aligns directly with the directives of the Central Bank of Iraq (CBI) and the KRG Ministry of Finance.
The regulatory crackdown includes strict enforcement measures.
According to the statement, authorities will begin identifying and closing any headquarters or offices that practice these activities under the guise of legitimate “companies,” and individuals responsible will be referred to the judiciary for prosecution.
The KRG Interior Ministry also urged citizens to avoid these transactions to safeguard their savings and called on individuals who have already lost funds to pursue available legal avenues to reclaim their assets.
Regulatory Rationale
The decision to ban cryptocurrency trading is fundamentally rooted in consumer protection and financial security.
The KRG Interior Ministry noted that the absence of an official framework leaves those who engage in digital currency speculation entirely unprotected from market volatility and fraud.
This regional action mirrors long-standing national anxieties regarding digital assets.
According to Kurdistan24 investigations, Iraq’s opposition to cryptocurrencies stems from its fears of unregulated digital currencies posing serious risks to both Iraq’s financial system and its national security.
The CBI has consistently cited extreme volatility, the absence of regulatory safeguards, and the potential for criminal exploitation as the primary reasons for maintaining a prohibition on digital assets.
These concerns are amplified by the decentralized nature of the crypto market.
In a report by Al Jazeera journalist Fares al-Khayyam, Mudher Mohammad Saleh, the economic advisor to the Iraqi Prime Minister, emphasized that cryptocurrencies are absolutely prohibited in Iraq because their privacy and decentralization create opportunities for illicit activities.
According to Al Jazeera, Saleh highlighted that the lack of oversight by a central bank or monetary authority makes these digital currencies a tool for money laundering and a mechanism utilized by dangerous organizations.
Iraq’s Broader Policy on Cryptocurrencies
The KRG Interior Ministry’s ban is the latest enforcement action within a nearly decade-long national policy in Iraq.
The the foundation of Iraq’s stance dates back to Dec. 2017, when the CBI issued a formal warning prohibiting banks, financial institutions, and currency traders from dealing in cryptocurrencies.
The CBI warned that traders engaging in crypto transactions would face penalties under the country’s Anti-Money Laundering and Terrorist Financing Law.
The Iraqi banking sector has actively enforced this prohibition.
According to the report by the Trade Bank of Iraq, acting on CBI directives, instructed all banks and payment providers to block the use of electronic cards and digital wallets for speculation or trading in any form of digital currency.
Iraq’s national policy is also driven by macroeconomic considerations.
Al Jazeera reported that Mustafa Hantoosh, a researcher specializing in financial and banking affairs, ruled out the utility of cryptocurrencies for Iraq’s economic development.
According to Al Jazeera, Hantoosh noted that Iraq’s economy is structurally dependent on oil exports priced in dollars, and the country does not require decentralized digital currencies to bypass sanctions or facilitate international trade.
Furthermore, Hantoosh warned that introducing cryptocurrencies into the Iraqi market would likely facilitate massive speculation and money laundering rather than foster legitimate economic growth.
While the ban on private cryptocurrencies remains total, the Iraqi government is not entirely opposed to digital finance.
The background report stated that the CBI is actively developing a state-issued central bank digital currency (CBDC), known as the digital dinar.
This controlled digital currency aims to modernize the national payments system, reduce cash leakage, and combat money laundering while strictly preserving the oversight of the central bank.
