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With the official approval of the use of cryptocurrencies for foreign trade by the Ministry of Trade, Iran becomes the first country in the world to adopt cryptocurrencies.
The obvious problem with this news is that the country’s innovative policies are clearly aimed at circumventing financial sanctions that have hindered its participation in the global economy for years.
These circumstances set an ambivalent tone for the Iranian experiment. For some, it may prove crypto’s ability to liberate itself by circumventing the all-too-real hegemony of the political will of the United States and the international financial institutions that enforce it, but hard-line cryptoskeptics believe that We can get the proof. They need the prophecy that decentralized digital assets are the weapon of choice for disrupting the fragile world order.
Ethical arguments aside, I would like to know exactly how this strategy works, what impact it will have on Iran’s trading partners, and what challenges it will draw from hostile enforcement agencies.
The first official unveiling of a trading system in Iran that will allow local businesses to settle cross-border payments using cryptocurrencies was made in January 2022. To provide opportunities for importers and exporters of such systems, the outcome of joint actions by the Central Bank of Iran and the Ministry of Trade should provide:
All economic players can use these cryptocurrencies. Traders can receive rubles, rupees, dollars, or euros and use them to acquire cryptocurrencies like Bitcoin. Bitcoin is It is a form of credit and can be passed on to the seller or importer. […] Since the cryptocurrency market runs on credit, it is easy for our economic players to use it and it is widely used.
In August, Peyman-Pak revealed that Iran had placed its first import order using cryptocurrencies. , claimed that the $10 million order was the first of many international transactions to be settled in cryptocurrencies and that it plans to ramp up this in September.
On August 30, Trade Minister Reza Fatemi Amin confirmed that detailed regulations outlining the use of cryptocurrencies for trading have been approved. The full text is not yet available online, but local businesses should be able to import cars and various imports into Iran using cryptocurrencies instead of US dollars and euros.
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Meanwhile, the local business community expressed concern about the possible design of this policy. Alireza Managebi, head of Iran’s importers group and head of foreign companies, stresses the need to prepare stable regulations and infrastructure to successfully use cryptocurrencies for imports. Did. He also threatened possible new payments leading to the emergence of rent-seeking business groups.
Babak Behboudi, co-founder of digital asset trading platform SynchroBit Hybrid Exchange, told Cointelegraph that although the official policy was only recently approved, the Iranian government and companies have been using crypto for several years. It said it uses currency as a payment method. now.
However, there are various reasons why governments have decided to allow such practices on a national scale. For example, the disappointment of Iranian negotiators in achieving a win-win deal with the West on the nuclear deal, dissatisfaction with the economy and hyperinflation. in the domestic market.
The emergence of China’s digital yuan and the geopolitical conflict between Russia and Ukraine will also have a significant impact on such decisions, Behboudi added.
Questions remain about the effectiveness of the new strategy. Unlike Iran, most countries do not have a legal framework for using crypto as a corporate payment method or, at worst, directly ban it, so most of the potential foreign partners are , face difficulties when making transactions in crypto. The pseudonymity of Bitcoin (BTC) and other mainstream cryptocurrencies does not provide enough assurance to potential partners that they are invisible to US financial authorities.
Behboudi believes this leaves foreign companies with two options. They either use the intermediation of agents to convert cryptocurrencies to fiat currency in crypto-friendly jurisdictions, or companies in third countries that trade with Iran, such as Russia, Turkey, China, and the United Arab Emirates. service can be used.
Christian Contardo, global trade and national security attorney at law firm Lowenstein Sandler LLP, believes the range of potential Iranian partners is fairly limited. The ease of crypto trading can facilitate legitimate trading, especially in areas where traditional banking is impractical or unreliable. Unless they do, he added, it is unlikely that large legitimate commercial entities will trade cryptocurrencies with Iranian counterparties.
To date, there have been few reports of people using cryptocurrencies to evade sanctions in Iran.Binance received no allegations after journalists claimed it was serving Iranian customers, but then came Kraken, another major crypto exchange under For exactly the same reason, a 2019 U.S. Department of the Treasury Office of Foreign Assets Control investigation. Currently, at least one individual has committed more than $10 million from a U.S.-based crypto exchange to an exchange in a sanctioned country. It is believed that Bitcoin was transferred.
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Contaldo believes enforcers, especially the United States, will step up scrutiny of deals involving countries like Iran. In practice, tracking all large transactions is nearly impossible, but we have all the tools you need.
Even enforcement agencies and commercial investigative agencies have multiple sources of information to identify the parties involved in a transaction. Once that information is aggregated and the parties identified, ledger evidence becomes a powerful legal It becomes coercive.
Given recent announcements by Russian officials who are also actively exploring the possibility of using crypto for cross-border payments, Iran’s strategy includes sanctioned countries and those willing to do business with them. It is possible to start digitizing the parallel market. Behboudi associates this potential with the further development of central bank digital currencies (CBDC).
The rise of CBDCs such as the digital yuan, ruble, rial and lira can be minimized if these countries can manage their transactions through bilateral and multilateral agreements, and businesses can use CBDCs. will be able to trade with each other.
So, in a way, Irans innovative strategy of adopting cryptocurrencies as a cross-border method will not change much unless private companies are allowed to use decentralized currencies as a payment method. This loophole will attract a limited list of countries that previously did not hesitate to trade with Iran.
