Iran Approves Cryptocurrency Regulations, Raising Fears Of Skirting Sanctions

The topic of utilizing cryptocurrencies to get around sanctions came to light earlier this month when a top Iranian trade official revealed that Tehran had for the first time paid a $10 million import bill with an unnamed trade partner using an unidentified cryptocurrency. Alireza Peyman-Pak, the deputy minister of trade and industry, stated in a tweet on August 9 that there would be more of these kinds of deals, and by the end of September, “the usage of cryptocurrencies would be prevalent in foreign trade with targeted countries”. The announcement was interpreted as a signal from Tehran that it had discovered a way around international sanctions that had cut off access to SWIFT, the largest financial transfer system in the world, and had for years restricted Iran’s ability to purchase weapons and foreign technology.

In an effort to avoid some financial restrictions imposed by the United States due to Tehran’s nuclear program, the Iranian government has authorized a set of rules for cryptocurrency trade. This information was released on August 29, just a few weeks after the Iranian Trade Development Organization authorized its first formal import order using bitcoin, which was for the import of cars valued at $10 million. The resolution “specifies all aspects relating to cryptocurrencies, including how to provide fuel and electricity for mining them, and how to provide licenses,” according to Trade Minister Seyed Reza Fatemi Amin.

The new regulations permit the import of any goods into the nation, a move that might allow Iran to evade U.S. sanctions that have severely weakened the national currency and crippled the economy. This could increase demand for cryptocurrencies, which are less regulated and can be used by Iranians in transactions where Western currencies are prohibited.

Powerful computers compete to solve challenging mathematical equations or riddles in a process known as “mining,” which is how Bitcoin and other cryptocurrencies are produced. Large amounts of electricity are needed for the process.

According to a  report from last year, Iran was home to 4.5 percent of all bitcoin mining activity worldwide, in part due to the nation’s subsidized, cheap electricity. According to reports, U.S. sanctions that prevent Iran from using the global banking system have made mining operations and cryptocurrency use even more popular.

Financial transactions may be carried out rapidly and securely without using major banks thanks to blockchain technology, which is employed in digital currencies.

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