An effective method of trade financing is assignment of proceeds under letter of credit, which is encapsulated in Article 39 of UCP 600. Although this article recognizes such a mechanism, it makes its application subject to governing law of credit. In case the credit is subject to Iranian law, these questions arise: whether assignment of proceeds is permitted in Iranian legal system? what is the legal nature of this mechanism? whether consent of issuing bank is a condition for its validity? According to findings of this research, assignment of proceeds can be considered as a debt purchase contract in which bank's consent is not a condition for its validity. Additionally, prohibition on discounting documentary credits contained in first section of foreign exchange regulations has no legal basis because Central Bank has acted beyond its authority and this prohibition contradicts rules bestowing rights, the revocation of which requires permission of Parliament.