Iraq Crypto Mining Ban Since 2017: What You Need to Know

Back in 2017, Iraq made a bold move - it banned cryptocurrency mining and trading outright. No licenses. No exceptions. No gray area. The Central Bank of Iraq (CBI) issued a clear directive: digital currencies like Bitcoin, Ethereum, and everything else were off-limits. It wasn’t just a warning. It was a full stop. And seven years later, that ban is still in place - even as the world moves on.

Why Did Iraq Ban Crypto in 2017?

The Central Bank didn’t wake up one day and decide to outlaw Bitcoin because they disliked it. They had real concerns. Iraq’s financial system was (and still is) fragile. Banks struggled with trust, transparency, and basic infrastructure. Cryptocurrencies, with their anonymous transactions and decentralized networks, looked like a threat - not an opportunity.

The CBI pointed to three big problems: money laundering, uncontrolled volatility, and the lack of any legal framework to track or tax digital asset activity. In a country where cash still dominates and formal banking reaches only about 60% of adults, letting in something as wild as crypto felt like inviting a wildfire into a dry forest.

They also worried about energy use. Bitcoin mining eats electricity - a lot of it. Iraq already struggles with power shortages. The CBI’s 2017 statement even referenced environmental risks, making Iraq one of the first countries to link crypto mining to energy policy. Greenpeace later noted Iraq was among the earliest to raise this issue publicly.

It wasn’t just the central bank. In 2018, the Kurdistan Regional Government’s Supreme Fatwa Committee added its voice, declaring OneCoin - a notorious crypto scam - illegal under Islamic law. That made it clear: this wasn’t just a financial decision. It was a cultural and religious one too.

Who Got Caught?

The law says crypto trading or mining is illegal. But does anyone actually get punished?

According to underground sources, at least two people were arrested in Baghdad and Basra for running crypto operations. One was caught running a small mining rig in his garage. Another was found transferring Bitcoin through peer-to-peer apps. But here’s the twist: no formal trials have been reported. Lawyer Hayan Al-Khayyat says he’s never seen a case go to court specifically for crypto trading. That’s not because the law isn’t there - it’s because enforcement is patchy.

Most people who trade crypto in Iraq do it quietly. They meet in cafes, whisper about wallets, use Facebook groups to swap keys, and avoid using their real names. Ahmed Crypto, a 33-year-old from Baghdad, says he used to run a small office for crypto exchanges. Then came the warnings. Now he works from home, encrypted and hidden. "They call it backward," he says. "But if they can’t regulate it, why ban it?"

His $10,000 in Bitcoin isn’t sitting in a bank. It’s in a cold wallet, hidden in a safe. He’s not alone. Hundreds, maybe thousands, of Iraqis are doing the same thing. The ban didn’t kill crypto - it just pushed it underground.

How People Still Trade Crypto in Iraq

You won’t find a Bitcoin ATM in Baghdad. You won’t see a crypto exchange listed on Google. But you’ll find people trading on Telegram, WhatsApp, and Facebook Marketplace.

The process is simple: find someone in a local group, agree on a price in Iraqi dinars, meet in a public place, hand over cash, and get a private key sent to your phone. No ID. No paperwork. No traceable bank record. It’s peer-to-peer trading at its most raw.

Some use remittance services to move money abroad, then buy crypto on international exchanges. Others trade directly with traders in Turkey or Jordan, where crypto is legal. The border is porous. The internet is everywhere. And the demand? It’s growing.

Ashur Al-Nuaimi, another trader, says the real problem isn’t crypto - it’s ignorance. "The Central Bank doesn’t understand blockchain," he says. "They see it as magic money. They don’t know it’s a ledger. They don’t know it can’t be forged. They’re scared of what they don’t understand."

The Economic Cost of the Ban

The ban didn’t just affect hobbyists. It hit businesses too.

Iraqi exporters struggle to get paid by foreign buyers. Traditional wire transfers take days, cost up to 8% in fees, and often get frozen due to overzealous anti-money laundering checks. Crypto could have solved this - fast, cheap, borderless. But it’s illegal.

Importers face the same problem. Paying for goods from China or Turkey? Banks reject transactions flagged as "high risk." Some businesses now pay in cash through intermediaries - a risky, slow, expensive workaround.

The result? Higher prices. Slower trade. Lost opportunities. A 2024 World Bank report noted that Iraq’s crypto ban contributes to its low ranking in cross-border payment efficiency - worse than most countries in the Middle East.

Meanwhile, neighboring countries like Jordan and Lebanon quietly allow crypto use. Iraqi entrepreneurs cross the border to open crypto-linked businesses. The ban isn’t stopping innovation - it’s just making it harder, riskier, and more expensive.

How Iraq Compares to Other Countries

Iraq isn’t alone. As of 2025, only ten countries have total crypto bans: China, Egypt, Algeria, Bangladesh, Nepal, Afghanistan, Morocco, Bolivia, Russia, and Iraq.

China shut down mining in 2021 to cut energy use and control capital flight. Egypt banned crypto for religious and economic reasons. Bangladesh criminalized possession - you can be jailed for holding Bitcoin.

But here’s the difference: most of these countries are tightening enforcement. China built a digital yuan to replace crypto. Egypt is exploring a regulated crypto sandbox. Bangladesh is studying how to tax it.

Iraq? Nothing. No review. No pilot. No committee. The Central Bank hasn’t changed its stance since 2017. Even when Bolivia reversed its 2014 ban in 2024 to allow regulated crypto transactions, Iraq stayed silent.

It’s not that Iraq is more strict. It’s that it’s stuck. No one’s pushing for change. No one’s proposing alternatives. The ban is frozen in time.

What Could Change?

The underground crypto community has a simple message: regulate, don’t ban.

They argue that if Iraq created a licensing system - like the UAE or Singapore - it could tax transactions, track suspicious activity, and even generate revenue. A small fee on each trade could fund digital infrastructure. Miners could be required to use renewable energy. Exchanges could be required to verify users.

Some think the Central Bank fears losing control. But control isn’t about banning - it’s about oversight. Countries that embraced regulation, like El Salvador and the UAE, didn’t lose control. They gained it.

The biggest barrier isn’t technology. It’s mindset. The CBI still sees crypto as a threat. But to traders, it’s a lifeline - a way to bypass broken systems and connect to the global economy.

Until Iraq updates its view of digital money, the ban will stay - and so will the underground.

Is the Ban Working?

The short answer? No.

The ban didn’t stop crypto. It just made it dangerous. People still mine. They still trade. They still send money. The difference? Now they do it without legal protection. If they get scammed, they have no recourse. If they get raided, they have no lawyer to call. If their wallet is lost, there’s no help.

The ban protects the banking system - but only on paper. In reality, it’s pushing Iraq’s tech-savvy youth into a risky, unregulated shadow economy. Meanwhile, the country loses out on innovation, investment, and economic growth.

The world is moving toward crypto integration - not elimination. Iraq is holding on to a 2017 policy in a 2025 world. And the longer it waits, the harder the reset will be.