Thursday, October 6, 2022

Iran Attempts to Avoid Import Sanctions With New Crypto Laws

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The Iranian government has officially approved the usage of crypto as a payment method for importing goods as the country is looking for new ways to circumvent sanctions. 

The new law legalizes the use of cryptocurrency instead of other currencies like the dollar and euro. 

“All the issues related to crypto-assets, including how to provide fuel and energy, and how to assign and grant licenses, were devised,” Reza Fatemi Amin, Industry, Mines and Trade Minister, commented. 

Earlier in August, Iran executed the first import order worth $10 million, indicating that crypto might, in fact, be a successful and efficient (and untraceable) way to conduct business. Exchanging value through cryptocurrency helps Iran go around the traditional banking system, bringing the possibility of unauthorized international transactions. 

“By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries,” Deputy Iranian trade minister Alireza Peymanpak said at the time.

As to “why” a government that tries to avoid sanctions would publicly announce that it is using crypto to do just that, Richard Goldberg, a former National Security Council member on the Iran desk, currently a senior advisor to the D.C.-based Foundation for Defense of Democracies think tank, and a host of a crypto podcast Cryptonite, shared to Politico that Iran might be doing it to attract attention to the countries that imposed the sanctions and see what happens next.

“This is the most direct, in-your-face flouting of U.S. sanctions by a regime using cryptocurrency to date,” Goldberg explained. “[It’s] a test case. They want to see, what does the United States do in response? What does Europe do in response?” 

Goldberg also believes that the authorities’ efforts to circumvent sanctions will not stop with this legislation. “I’m confident they have enough money where they’ll find various technical situations to mitigate [sanctions]. They won’t be able to eliminate, but they can mitigate.”

Iran already has had a complicated relationship with digital assets. In 2019, the government banned cryptocurrency trading inside the country but approved crypto mining, under certain circumstances. Last week alone, Iranian authorities announced that they shut down over 9,000 illegal crypto mining rigs in Tehran in the last five months.

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