Iraq Crypto Mining Ban Since 2017: What Happened and Why It Still Stands

Back in 2017, Iraq made a bold move - it banned cryptocurrency mining and trading outright. No exceptions. No gray areas. The Central Bank of Iraq (CBI) declared digital currencies illegal, calling them a threat to the nation’s financial stability. Five years later, the ban is still in place. And despite the global surge in crypto adoption, Iraq hasn’t budged. Not even a little.

Why Did Iraq Ban Crypto in the First Place?

The Central Bank of Iraq didn’t wake up one day and decide to outlaw Bitcoin out of nowhere. The decision came after months of internal warnings. Cryptocurrencies were slipping through the cracks of Iraq’s already fragile banking system. No oversight. No taxes. No accountability. Transactions happened in the dark, outside any legal framework.

The bank’s main concerns? Money laundering, fraud, and the risk of destabilizing the national currency. Iraq’s economy was still recovering from decades of conflict. The last thing officials wanted was a flood of untraceable digital cash inflating prices, fueling speculation, or being used to fund illegal activity. They also feared that ordinary citizens, desperate for better financial tools, would lose everything to volatile crypto schemes.

In 2018, the Kurdistan Regional Government added weight to the ban when its Supreme Fatwa Committee ruled that OneCoin - a notorious crypto scam - violated Islamic law. That move wasn’t just about finance; it was a religious and cultural signal. The message was clear: crypto wasn’t just risky, it was morally questionable in the eyes of many.

How the Ban Works in Practice

The law is simple: no buying, selling, mining, or holding cryptocurrencies through any Iraqi financial institution. Banks can’t process crypto-related payments. Payment processors can’t support digital wallets. Even using foreign crypto cards to make purchases inside Iraq is forbidden.

The CBI also banned electronic wallets and digital cards for speculative trading. That means if you try to use a crypto debit card to pay for groceries in Baghdad, the transaction will be blocked. If a bank detects any link between an account and crypto activity - even indirect - the account can be frozen.

But here’s the catch: the ban only applies to formal institutions. It doesn’t stop people. It doesn’t stop miners. It doesn’t stop traders. It just makes it dangerous.

The Underground Crypto Scene in Iraq

Despite the ban, crypto is alive in Iraq - just not where the government can see it.

In Baghdad, people meet in quiet cafes after dark. They whisper about Bitcoin prices. They swap wallet addresses on encrypted apps. Some trade using cash in parking lots. Others run Facebook pages like Ahmed Crypto, a 33-year-old who holds $10,000 in digital assets and manages his portfolio through a pseudonym. He used to have an office. Now he works from home, terrified of being raided.

Miners run rigs in basements and back rooms, using cheap electricity from unofficial sources. Some say they’re paying off local officials to look the other way. Others just hope they won’t get caught.

There have been arrests - at least two confirmed by underground sources. But legal expert Hayan Al-Khayyat says he’s never seen a formal trial for crypto trading. No one’s been sentenced. No court records exist. That suggests the ban is enforced more through fear than law.

Why the Ban Isn’t Working

Governments think they can shut down crypto by making it illegal. But crypto doesn’t care about borders or bank licenses. It runs on networks, not buildings.

In Iraq, the ban has created a black market. People who need to send money abroad - say, a worker in Jordan sending cash home to family in Basra - can’t use traditional remittance services because of slow processing and high fees. So they turn to crypto. They buy Bitcoin in Amman, send it over the border, and their family cashes out in Baghdad through a middleman. It’s faster. Cheaper. And completely illegal.

The result? Billions in untracked transactions flow through Iraq every year. The government loses tax revenue. Financial regulators lose control. And ordinary people? They’re stuck in a system that doesn’t serve them.

Ashur Al-Nuaimi, another Iraqi crypto user, puts it bluntly: "The Central Bank doesn’t understand blockchain. They’re scared of what they don’t know. So they ban it. But banning doesn’t erase technology. It just pushes it underground."

How Iraq Compares to Other Countries

Iraq isn’t alone. As of 2025, only about ten countries have full bans on cryptocurrency. China shut down mining in 2021. Egypt banned it over religious concerns. Bangladesh criminalized possession. Russia restricts it but doesn’t fully ban it.

But Iraq’s ban stands out because it’s one of the few in a developing country with a large youth population and weak banking infrastructure. In places like Nigeria or Kenya, crypto filled a void left by banks. In Iraq, the ban created a void - and people are jumping into it anyway.

Even Bolivia, which banned crypto in 2014, reversed its decision in 2024 to allow regulated financial institutions to process digital assets. Iraq hasn’t even considered a review.

The Environmental Angle

When the CBI announced the ban in 2017, it cited energy waste as a concern. Bitcoin mining uses massive amounts of electricity - more than some small countries. Greenpeace USA pointed to Iraq as one of the first nations to explicitly link crypto mining to energy abuse.

Iraq’s power grid is unreliable. Rolling blackouts are common. Mining rigs, running 24/7, strain the system even more. Some miners tap into unregulated power lines. Others bribe utility workers for bulk rates. The government sees this as a threat to public infrastructure.

But here’s the irony: if Iraq allowed regulated mining, it could tax the electricity usage. It could require miners to use solar or renewable sources. It could create jobs and bring in foreign investment. Instead, it’s chasing ghosts.

What’s Next for Crypto in Iraq?

The Central Bank says it has no plans to change its stance. No working groups. No public consultations. No pilot programs. Just silence.

Meanwhile, the underground market grows. More young Iraqis learn how to mine. More traders find ways to bypass restrictions. More businesses rely on crypto for cross-border payments, even if it means risking their licenses.

The real question isn’t whether the ban will be lifted. It’s whether Iraq can afford to keep it.

Crypto isn’t going away. The world is moving toward digital finance. Iraq is digging its heels in - but the ground beneath it is shifting.

People like Ahmed Crypto aren’t criminals. They’re survivors. They’re using the tools available to them in a broken system. And until the government offers a better alternative, they’ll keep finding ways to make it work.

What This Means for You

If you’re in Iraq and thinking about crypto: know the risks. You can be arrested. Your assets can be seized. Your bank account can vanish. But if you’re outside Iraq and sending money to someone there, understand that crypto might be the only reliable way to get it through.

If you’re an investor or business looking at Iraq’s market: the ban creates huge friction. Don’t assume people aren’t using crypto. Assume they’re using it in ways you can’t see.

And if you’re watching from afar: Iraq’s story isn’t just about crypto. It’s about control versus freedom. Fear versus innovation. And what happens when a government tries to stop a technology it doesn’t understand.

The ban may look strong on paper. But in practice? It’s a wall with holes. And people are slipping through - one transaction at a time.