The Iranian government has given the go-ahead for the use of cryptocurrencies for trading purposes. This will potentially help the country circumvent some US financial sanctions imposed to tackle Tehran’s nuclear program. Sanctions have crippled Iran’s economy and severely weakened its national currency.
The latest development comes just weeks after Iran’s Trade Development Organization approved its first official import order of $10 million for the import of cars. This was a test run or a pilot project to see if the country could bypass the dollar-dominated global finance system. Seyed Reza Fatemi Amin, the Iranian Trade Minister, said the government’s resolution specifies all issues related to cryptocurrencies. It includes how to provide fuel and energy for mining digital assets and how to grant licenses.
Iran will be able to import goods with cryptocurrencies as its less regulated. Moreover, Iranians can use it in transactions where Western currencies are banned. Through the new law, Iran will be able to trade with other countries that have been embargoed by US sanctions, like Russia.
Alireza Peymanpak, a deputy Iranian trade minister, says that the use of cryptocurrencies and smart contracts, by September-end, will be widely used in foreign trade with target countries. Analysts believe Iran will use cryptocurrencies to settle cross-border trades. Western sanctions have affected the sale of commodities and technologies to Iran. But Tehran has come up with ways to evade the sanctions – including payment offsetting schemes that allow it to sell oil in contravention of sanctions. But proceeds from it have been said to have been funneled to terrorist groups.