Iceland does not specifically ban anything to do with cryptos.
Transferring krónur out of the country to any foreign party including exchanges is illegal without permits.

"Due to the capital controls put in place in 2008 to stop money flight on the króna, buying and selling Bitcoin in Iceland, which appears to consider Bitcoin as a foreign currency, is Illegal. The Icelandic Central Bank confirmed "It is prohibited to engage in foreign exchange trading with the electronic currency Bitcoin, according to the Icelandic Foreign Exchange Act.",[15] however commentators suggest bitcoins mined within Iceland could be freely traded."