Legal Gaps in Cryptocurrency Payments and Related Crimes: Proposals for Criminalization and Legislative Reform in Iran

Abstract

The rapid expansion of cryptocurrency use has created significant challenges for legal systems whose financial and criminal regulations were primarily designed for centralized and institutionally supervised payment mechanisms. In Iran, the growing use of crypto-assets for the transfer of economic value has not been accompanied by a comprehensive and coherent legislative framework governing cryptocurrency payments, service providers, user identification, transaction monitoring, digital evidence, and asset recovery. This study aims to identify the principal legal gaps affecting cryptocurrency payments, examine the crimes arising from or facilitated by those gaps, and propose an appropriate framework for criminalization and legislative reform. Using a descriptive-analytical legal method, the study examines the legal status of crypto-assets, the fragmented regulatory environment, and the applicability of existing criminal-law rules to cryptocurrency-related misconduct. The findings indicate that the principal deficiencies concern uncertainty regarding the legal classification of crypto-assets, the absence of a unified licensing regime for cryptocurrency service providers, inadequate customer-identification and record-keeping requirements, weaknesses in transaction tracing and institutional coordination, ambiguity concerning digital evidence, and insufficient procedures for freezing, seizing, confiscating, and restituting digital assets. These deficiencies can facilitate fraud, unauthorized transfers, cyber-enabled appropriation, money laundering, unlawful financial intermediation, and the concealment or transfer of criminal proceeds. The study argues that reform should avoid indiscriminate criminalization of cryptocurrency technology and instead adopt a regulated-legality model based on technological neutrality, proportionality, and risk-based supervision. The proposed framework includes statutory recognition of crypto-assets as legally protectable economic value, clear definitions of regulated activities, licensing of professional service providers, customer due diligence, transaction-record obligations, targeted criminalization of intentional harmful conduct, recognition of blockchain evidence, specialized asset-recovery procedures, stronger institutional coordination, and enhanced technical and international cooperation.