The Central Bank of Iran appears set to prohibit "unapproved" cryptocurrencies from being used for payments in the country, a draft report obtained by CoinDesk states.

According to a translation of the report entitled "Obligations and Rules Regarding Cryptocurrencies," "any cryptocurrency wallets will be used only for holding and transferring cryptocurrencies and integrating any kind of services in wallets using cryptocurrencies is forbidden."

If the plan is ultimately approved, the central bank will effectively seek to block the use of unapproved cryptocurrencies as a means of payment. However, the report indicates that the Central Bank of Iran will not directly restrict anyone from personally holding or transferring small amounts of approved cryptocurrency.

It's not immediately clear which cryptocurrencies will receive approval, though a source with knowledge of the process told CoinDesk that regulators want all bitcoin transactions in the country to be settled in the Iranian rial.

As it stands, the report is in its first draft and is not yet official policy within Iran, according to sources. The report will be discussed during the Electronic Banking and Payment Systems conference in Tehran that starts on Jan. 29, they said.

Plus, Iranians could be barred from holding large amounts of cryptocurrency in the same way they are officially restricted from owning more than 10,000 euros outside of their regulated bank accounts, according to the report.

A Tehran-based cryptocurrency advocate and developer, who spoke to CoinDesk on the condition of anonymity, said that the community in Iran is "shocked" by the developments and that “this may be worse specifically for businesses that receive bitcoin from foreign customers, since there is little KYC [know-your-customer] procedures with foreign customers and now also businesses can't have their bitcoins directly.”

Several local sources contended this was a move by the Iranian government’s effort to protect the fiat Iranian rial from competition.

Notably, the report states that tokens pegged to fiat currencies, precious metals and commodities are similarly prohibited as means of payment. That said, tokens pegged to the Iranian rial are allowed provided that they are issued by the central bank itself – a move that Al Jazeera has reported is set to be unveiled at this week’s conference.

The report also states that Iranian exchanges are now obligated to seek licenses, although the document itself offers little clarity on when that process will begin or how exchanges can go about doing so. Further, the report indicates that the central bank will create and update a list every three months for cryptocurrencies that are allowed to be traded on exchanges.

Currently, Iranian exchanges collect know-your-customer information, such as addresses and government-issued IDs, but they otherwise operate more like independent sellers than their corporate counterparts abroad.

"Getting an exchange license is not an easy task," an anonymous blockchain entrepreneur in Iran told CoinDesk, arguing that these regulations could cripple the nascent industry.

On the other hand, he said that at least the government finally recognizes bitcoin as an asset and didn’t completely outlaw it, as there is still some degree of allowance for people to hold and transfer small amounts of crypto for non-commercial purposes.

Still, an anonymous cryptocurrency miner told CoinDesk:

The draft report (written in Farsi) can be found below:

IT Reg Cryptocurrency 0.0 by on Scribd

Bitcoin and Iran rial image via Shutterstock