Iran cheerfully admits using cryptocurrency to pay for imports
Trade minister says to expect more of this sanctions-busting stuff starting in September
Iran has announced it used cryptocurrency to pay for imports, raising the prospect that the nation is using digital assets to evade sanctions.
Trade minister Alireza Peyman Pak revealed the transaction with the tweet below, which translates as "This week, the first official import order was successfully placed with cryptocurrency worth ten million dollars. By the end of September, the use of cryptocurrencies and smart contracts will be widespread in foreign trade with target countries."
این هفته، اولین ثبت سفارش رسمی واردات با #رمز_ارز به ارزشی معادل ۱۰ میلیون دلار با موفقیت صورت پذیرفت. تا پایان شهریور ماه، استفاده از رمز ارزها و قراردادهای هوشمند به صورت گسترده در تجارت خارجی با کشورهای هدف عمومیت خواهد یافت. #فصل_جدید_تجارت_خارجی— علیرضا پیمان پاک🇮🇷 (@peymanpak_ir) August 9, 2022
It is unclear what Peman Pak referred to with his mention of widespread use of crypto for foreign trade, and the identity of the foreign countries he mentioned is also obscure.
But the intent of the announcement appears clear: Iran will use cryptocurrency to settle cross-border trades.
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That's very significant because Iran is subject to extensive sanctions aimed at preventing its ability to acquire nuclear weapons and reduce its ability to sponsor terrorism. Sanctions prevent the sale of many commodities and technologies to Iran, and financial institutions aren't allowed to deal with their Iranian counterparts, who are mostly shunned around the world.
As explained in this advisory [PDF] issued by the US Treasury, Iran has developed numerous practices to evade sanctions, including payment offsetting schemes that let it sell oil in contravention of sanctions. Proceeds of such sales are alleged to have been funnelled to terrorist groups.
While cryptocurrency's anonymity has been largely disproved, trades in digital assets aren't regulated so sanctions enforcement will be more complex if Iran and its trading partners use crypto instead of fiat currencies.
Which perhaps adds more weight to the argument that cryptocurrency has few proven uses beyond speculative trading, making the ransomware industry possible, and helping authoritarian states like Iran and North Korea to acquire materiel for weapons.
Peyman Pak's mention of "widespread" cross-border crypto deals, facilitated by automated smart contracts, therefore represents a challenge to those who monitor and enforce sanctions – and something new to worry about for the rest of us. ®