Iran dabbles in crypto for cross-border trade, in bid to evade sanctions

Iran has started using cryptocurrencies to settle cross-border trade deals, as the country continues to look for ways to avoid using the US dollar and the international banking system.

In one Tweeter On August 9, the head of the Iran Trade Promotion Organization (ITPO), Ali Reza Peymanpak, said that the first official import order using cryptocurrencies had been placed “this week”.

Peymanpak, who is also deputy minister of industry, mines and trade, did not specify what goods or services were traded, or with whom the trade took place, but said the transaction was worth $10 million. dollars.

He went on to say that the use of cryptocurrencies and smart contracts would become “widespread in foreign trade” with some countries in the near future.

He follows the news last month that Iran and Russia had taken steps to reduce the use of the dollar in their bilateral trade, by launching a settlement system using their own currencies.

In 2019, the Central Bank of Iran banned cryptocurrency trading in Iran. The country’s power grid has come under severe pressure at times due to the large amount of cryptocurrency “mining” in the country, which has led to widespread power outages. However, the government allows the use of bitcoin and other cryptocurrencies for international trade, to circumvent US sanctions.

In January, Iran More Press Agency reported that an agreement had been reached between ITPO and the country’s central bank to allow the use of cryptocurrencies in cross-border trade, saying at the time that the system would be operational “within the next two weeks”.

“These cryptocurrencies and blockchain systems have many practical discussions in business affairs,” Peymanpak said. More in January. “If we neglect it, we will lose a lot of business opportunities.” He went on to say that “In our major markets, such as Russia, China, India, and Southeast Asia, the use of cryptocurrencies is popular.”

While cryptocurrencies can be useful for Iranians trying to evade sanctions, US authorities are taking steps to clamp down where they can. The New York Times reported In July, cryptocurrency exchange Kraken was under federal investigation over suspicions that it allowed users in Iran to buy and sell digital tokens. Another exchange, Binance, also suffered allegations that it processed customer transactions in Iran despite international sanctions.

There are of course other risks for Iran and any counterparty to a transaction, including the volatility of most digital currencies.