Iraq

DeFi Intel Research Desk2026-07-14Asia

Is crypto legal in Iraq? (2026)

No — cryptocurrency is banned in Iraq. Current status: Prohibited for banks & payment firms; individuals in legal grey area. Oversight sits with Central Bank of Iraq (CBI). Full details — governing law, licensing, tax and dated enforcement history — follow below (last reviewed 2026-07-14).

Framework: Iraq operates one of the world's strictest crypto regimes. The Central Bank of Iraq (CBI) first banned cryptocurrency in 2017, citing anti-money-laundering and fraud concerns, and formalised the prohibition in Circular No. 125/5/9 of 22 November 2021, which forbids banks, electronic payment providers and other financial intermediaries from engaging in any transactions involving virtual assets. The bar was later extended to the use of electronic cards and wallets "for the purpose of speculation." Enforcement rests on the Anti-Money Laundering and Counter-Terrorist Financing Law No. 39 of 2015. There is no CASP or VASP licensing regime — the CBI does not license crypto companies, and has publicly warned that firms claiming a CBI licence to trade stocks, metals or cryptocurrencies are fraudulent.

Notably, no single statute explicitly criminalises private ownership or peer-to-peer trading of crypto by individuals, so informal possession and P2P activity sit in an unregulated grey area rather than being a clearly defined crime — while formal banking, exchange and payment rails are closed to crypto. Separately, the CBI is developing a "digital dinar" central bank digital currency: Governor Ali Al-Allaq announced on 26 February 2025 that the CBI would gradually replace paper notes with a CBDC, a project described in late 2025 as under implementation but still requiring time and infrastructure before launch.

Tax treatment

Because trading through licensed or banking channels is prohibited, Iraq has no crypto-specific tax regime — there is no published capital-gains rate, holding-period rule or reporting framework for virtual assets. Any residual treatment of informal individual gains under the general income-tax code is not addressed by CBI or Ministry of Finance guidance we could locate this session.

• Crypto-specific capital-gains rate: None published — trading via regulated channels is prohibited
• Holding-period / reporting rule: Pending verification

Travel rule applicability

Status: no licensed VASP sector. Because Iraq bans regulated crypto activity outright, there is no domestic VASP travel-rule regime to enforce. AML/CFT obligations flow from Law No. 39 of 2015, and secondary sources note Iraq aligned with FATF standards in a 2022 directive, but specific FATF Recommendation 16 transfer-data thresholds for virtual-asset transfers are pending verification.

Notable enforcement actions

• 2017. The Central Bank of Iraq issued its original prohibition on cryptocurrency, later formalised as Circular No. 125/5/9 (22 November 2021) barring supervised financial institutions from virtual-asset transactions.
• 8 April 2025. Erbil's General Security Directorate declared "trading in all types of electronic and digital currencies is prohibited" and that "forex and USDT companies are not authorized in the Kurdistan Region or Iraq," citing the CBI's 2017 ban and mounting public losses.
• June 2025. The Kurdistan Regional Government formed an interior-ministry committee empowered to raid premises and close crypto and forex companies; the move followed a Duhok-province scheme that allegedly defrauded investors of roughly $15 million, with two suspects arrested.
• 3 May 2026. The KRG Ministry of Interior — coordinating with the CBI and the KRG Ministry of Finance — issued a region-wide ban prohibiting citizens and commercial entities from digital-currency transactions and electronic financial speculation, warning of immediate closures and referral of violators to the judiciary for prosecution.

Public licensed CASP list

None. The Central Bank of Iraq does not license, register or authorise crypto-asset service providers, so there is no public CASP register to mirror. The CBI has instead issued public warnings that any company advertising a CBI licence to deal in cryptocurrencies, stocks or metals is fraudulent and subject to legal action. Any exchange or "USDT company" operating for Iraqi or Kurdistan residents does so outside the law.

Comparison to neighbours

Compare Iraq crypto regulation with three geographically adjacent jurisdictions:

Doing business in Iraq — practical notes

There is no lawful route to operate a licensed crypto exchange, custodian or payment firm serving Iraqi or Kurdistan residents: the CBI grants no crypto licences, and banks and electronic-payment providers are barred from touching virtual assets under Circular 125/5/9. In the Kurdistan Region, enforcement has escalated sharply — Erbil's General Security Directorate (April 2025), a KRG interior-ministry raid committee (June 2025) and a region-wide KRG Interior Ministry ban (May 2026) have targeted "forex and USDT companies" for closure and referred operators to prosecution. Individuals face a legal grey area for informal P2P activity, but no compliant on-ramp exists and banking access for anything crypto-adjacent is effectively closed. Firms should treat Iraq as a prohibited market and monitor the CBI's separate digital-dinar CBDC programme rather than any private-crypto opening.

Methodology and sources

This profile was researched and updated by DeFi Intel's research desk on 2026-07-14 from the primary and secondary sources listed below, including Central Bank of Iraq communications reported by Iraqi and Kurdistan news outlets and a compliance brief citing Circular No. 125/5/9 and AML/CFT Law No. 39 of 2015. Claims that could not be verified against a source are omitted or marked pending — we do not republish unverified third-party datasets. Submit corrections and primary-source links to research@defi-intel.com.

Sources

• AGBI — Kurdish authorities clamp down on crypto trading (June 2025; CBI warnings, Duhok $15m scam, KRG committee)
• Kurdistan24 — KRG Interior Ministry bans cryptocurrency trading, warns of legal action (3 May 2026)
• 964media — Erbil General Security Directorate bans crypto and forex trading (8 April 2025)
• Lightspark country brief — Circular No. 125/5/9 (Nov 2021) and AML/CFT Law No. 39 of 2015
• Central Banking — Iraq to develop a CBDC (digital dinar) as part of wider digitisation drive