http://www.platetectonics.com/book/images/Divergent1.gif
I did some research and found that Iceland is on the border of two tectonic plates, the Eurasian Plate, and the North American plate. They are both pulling away from each other making it a divergent boundary. Here's a picture of the Mid-Atlantic Ridge at Thingvellir.
http://www.jnb-birds.com/Iceland/Pingvellir_RiftValley_D.jpg
The North American Plate is moving at a rate of 2.3 cm or 1 inch per year west/southwest and the Eurasian plate is moving north at about 2 cm or 0.79 inches per year.
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