Iraq

Concerns about money laundering and terrorist financing.

Protection of the national financial system and stability.

Lack of regulatory oversight and consumer protection.

Perceived speculative nature and risks to investors.

**Central Bank of Iraq (CBI) - Official Statements:** While direct English links to the original Arabic directives are often difficult to find, reputable news outlets have widely reported on the ban.

A report by Reuters detailing the ban: https://www.reuters.com/markets/currencies/iraqi-authorities-issue-arrest-warrants-over-cryptocurrency-trading-2022-04-20/

Al-Monitor also reported on the Iraqi government's crackdown: https://www.al-monitor.com/originals/2022/05/iraq-cracks-down-crypto-trading-amid-concerns-money-laundering

**No specific capital gains tax for cryptocurrency.** Since cryptocurrency trading is prohibited, there are no provisions for taxing gains from such activities.

**General Context:** Iraq does not have a comprehensive, standalone capital gains tax on the sale of movable assets (like shares or other financial instruments) in the way many Western countries do. Gains from the sale of specific assets (e.g., real estate) might be taxed, but this does not extend to virtual assets given their illegal status.

**No specific income tax for cryptocurrency.** Income derived from crypto-related activities (e.g., mining, staking, trading profits) would not be recognized as legitimate income for tax purposes because the underlying activity is illegal.

**General Context:** Iraq has a progressive income tax system for individuals and a corporate income tax. However, these apply to legitimate, recognized sources of income.

**No specific VAT/GST rules for cryptocurrency.** Iraq generally has a sales tax rather than a comprehensive Value Added Tax (VAT) or Goods and Services Tax (GST) system in the full sense. Even in jurisdictions with VAT, crypto often receives special treatment (e.g., exempt from VAT when treated as a currency or financial service). In Iraq, the ban means there are no provisions for sales tax on crypto transactions.

**Reporting Requirements for Individuals and Businesses:**

**No specific reporting requirements for cryptocurrency for tax purposes.** Because crypto activities are banned, the government does not require or accept reports on crypto holdings or transactions for taxation.

**Anti-Money Laundering (AML) / Counter-Terrorist Financing (CTF):** Any individual or business found to be engaged in cryptocurrency activities would likely face investigations under Iraq's general anti-money laundering and counter-terrorist financing laws, not tax reporting requirements. These laws would treat illegal crypto transactions as potential financial crimes.

**None.** There is no crypto-specific tax legislation in Iraq. The regulatory stance is one of prohibition, not regulation and taxation.

Investigations for financial crimes (e.g., money laundering).

**Central Bank of Iraq (CBI) Directives:** The CBI has issued several circulars and statements prohibiting cryptocurrency activities. While direct English URLs to specific circulars on the CBI's often Arabic-only website can be challenging to find, these directives are widely reported by official Iraqi news agencies and international financial outlets.

**Iraq News Agency (INA):** Often reports official CBI statements. Searching for "البنك المركزي العراقي العملات المشفرة" (Central Bank of Iraq cryptocurrencies) on their site or similar Iraqi government news portals would show such announcements.

**Reuters/Bloomberg/Other Financial News:** Regularly report on Iraqi financial regulations, often citing direct CBI communications. For instance, news reports from **February 2022** widely covered the CBI's reinforcement of its ban.

**Law No. 64 of 2004 - Central Bank of Iraq Law:** This law establishes the CBI as the primary monetary authority with powers to regulate the financial system, issue currency, and manage monetary policy. This overarching authority underpins the CBI's power to ban unregulated financial instruments like stablecoins.

*Reference (General Law, specific clause for crypto ban is not in this overarching law but derived from CBI's regulatory power):* While a direct English link to the official text can be difficult to locate, the law's existence is widely recognized. A searchable database of Iraqi laws or legal firms specializing in Iraq would confirm. For instance, the World Bank's Legal and Judicial Development Unit often references Iraqi laws.

**Law No. 40 of 2015 - Law on Payment Systems and Services:** This law governs traditional and electronic payment systems and services in Iraq. While it defines "e-money" and payment service providers, stablecoins are not explicitly covered or permitted under this law, given the general ban. If stablecoins were ever to be permitted, they would likely be forced to fit within the definitions and licensing requirements of this law or a new specific framework.

*Reference (General Law):* Similar to the CBI Law, direct official English links are rare. Legal databases or specialized law firms would provide access.

**No formal classification exists for stablecoins.** Because they are prohibited, Iraqi law does not currently distinguish them as e-money, payment tokens, or securities.

If they were to be legalized, the CBI would likely assess their functionality:

If primarily used for payments, they might be considered a form of "e-money" or "payment token" under a revised or new framework, potentially drawing parallels to Law No. 40 of 2015.

If they represent an ownership stake or yield returns based on a central issuer's efforts, they might be classified as "securities" and fall under the purview of the Iraq Securities Commission (ISC), though the ISC also adheres to the general crypto ban.

**None exist.** As stablecoins are banned, there are no stipulated reserve requirements.

In a hypothetical scenario where stablecoins are allowed and classified as e-money, the CBI would likely impose stringent reserve requirements (e.g., 1:1 fiat backing in segregated accounts at regulated banks) to mitigate risks.

**No licensing framework exists.** No entity can legally issue stablecoins in Iraq.

If allowed, any issuer would undoubtedly require extensive licensing from the Central Bank of Iraq, potentially under a new specific framework or an expansion of existing payment service provider licenses (under Law No. 40 of 2015). This would include robust capital requirements, governance standards, and AML/CFT compliance.

**No official redemption rights are recognized.** Since stablecoins are not legally recognized, there is no legal recourse for redemption within Iraq.

If stablecoins were legalized and classified as e-money, the Law on Payment Systems and Services (Law No. 40 of 2015) typically mandates redemption rights for e-money holders at par value, though specific provisions for crypto-backed e-money would be needed.

**Absolutely no specific rules.** The Iraqi regulatory framework is far from this level of granularity concerning stablecoins, given the outright ban. Algorithmic stablecoins, due to their inherent volatility and complexity, would likely face even greater scrutiny and probable prohibition if a limited lifting of the crypto ban were ever considered.

**No active interaction.** The Central Bank of Iraq has not publicly announced any concrete plans or pilot programs for a Central Bank Digital Currency (CBDC). Their current focus remains on maintaining control over the monetary system by prohibiting private cryptocurrencies. Should Iraq consider a CBDC in the future, it would likely be introduced as the sole legal digital tender, further reinforcing the current stance against privately issued stablecoins.