There are strong indications with Iran that the country will soon begin cross-border transactions using cryptocurrency in other to evade U.S. sanctions. Local news outlet Tehran Times reported on Monday, Jan. 28 that Iran have began talks with at least eight countries in which it wants to have financial transitions via cryptocurrency.
According to Tehran Times, the acting head of Iran’s Trade Promotion Organization (TPO) Mohammad-Reza Modoudi claimed that representatives of Russia, United Kingdom, Germany, France, Switzerland, South Africa, Austria, and Bosnia have visited the country for negotiations over the plan.
Last year, Iran began plans to develop an indigenous cryptocurrency. Following the decision by the current U.S. government to fully restore sanctions against Iran later in the year, the government increased its efforts towards the state-owned cryptocurrency. As Smartereum reported, the Iranian government began collaboration with the Central Bank of Iran (CBI) and some local private consultancy firms who have the expertise to develop digital currency.
Cryptocurrency which is unregulated in most countries is seen as a plausible medium of conducting international transactions outside the global traditional financial industry. This has led countries like Russia, Venezuela, and Iran to at least consider cryptocurrency as a possible plan to evade economic sanctions.
In its report on Sunday, January 27, Al Jazeera revealed that Iran was close to unveiling its state-backed cryptocurrency as a respite from the sanctions which came to head when Iran was barred from SWIFT last November. The rationale behind the rail-backed digital currency is that it will first facilitate payment between local banks, institutions, and allow the public to pay for goods and service while also setting the foundation for a cryptocurrency-based international payment settlement system.
Iran reportedly has a trilateral blockchain cooperation agreement with Russia and Armenia, signed last year. The Russian representative to the talks Yuri Pripachkin had remarked that “an active development of an Iranian version of SWIFT is currently underway.” As Smartereum reported, Russian Ministry of Finance is in support of a digital currency which does not depend on the U.S. dollar—one that will be “inevitable” to evade sanctions from the United States. Russia, is reportedly working towards launching a regional digital currency alongside Belarus, Kazakhstan, Armenia and Kyrgyzstan under the Eurasian Economic Union (EAEU).
The U.S. to Oppose Iran’s Cryptocurrency Plan & Sanction Partners
The government of the United States led by President Donald Trump has made it clear that it will not condone plans by Iran to circumvent its sanctions through cryptocurrency. The U.S. also warned against partners who help the Iran evade sanctions.
A bill relating to the issue sponsored by Ted Cruz called for the addition of sanctions against any entity or person aiding Iran in the development of a digital currency. This also includes sanctions against any foreign entity or person that may facilitate transactions with the Islamic nation for both the “sale, and supply, or the transfer” of such a cryptocurrency. This puts countries discussing with Iran in a tricky position.
In the same vein, U.S. banned trading with the Petros, a cryptocurrency launched by the Venezuelan government. The oil-backed national crypto which was created to spur its economy and evade economic sanctions has not exactly been successful.