"The council of ministers ... has approved the mining of cryptographic processing products", the press release read.
At the same time, it stressed that cryptocurrencies would not be supported by the national banking system and should only be used bearing in mind possible risks.
The statement also noted that cryptocurrencies should not be used when making internal transactions and would be taxed.
Last year, Iran moved towards legalising the mining of cryptocurrencies despite the previous ban on domestic banks from dealing in digital currencies.
Iran's cyberspace council secretary previously stated that the country is hoping to use crypto to trade with partners and friendly countries to reduce the impact of US sanctions on its economy.
Cryptomining is performed on a computer, a process in which cryptocurrency transactions are verified by third parties and added to the blockchain digital ledger.
