Iran has started the application of cryptocurrency in the trading business. The information about this decision was released on August 9, 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.
On this Monday a statement was given by the Industry, Mines, and Trade Minister Reza Fatemi that “The decision has been made about using cryptocurrency instead of the US dollars and Euros”.
He further mentioned that “Ther solutions are also developed for possible issues relating to crypto-assets, including how to provide electricity and fuel as well as how to allocate and provide licenses”
This is only applicable to the import of goods into the country. Since 1979, Iran has been the target of sanctions from the US; after Iran refused to stop its uranium enrichment program in 2006, the restrictions became some of the toughest in the world.
According to the regional publication Iran International, cryptocurrency will be utilized to get over the sanctions and facilitate trade with other nations on the sanctions list, such as Russia. The central bank of Russia previously stated that it was open to the concept of using cryptocurrency for cross-border transactions.
Peymanpak, the head of Iran’s Trade Promotion Organization and a deputy commerce minister says that “By the end of September, the usage of cryptocurrencies and smart contracts would be fully implemented in overseas trade with target countries”.
In an effort to avoid the financial restrictions imposed by the United States due to Tehran’s nuclear program, the Iranian government has allowed the usage of cryptocurrency for trade in the country.
Another reason for this decision was to decrease the dependency of the country on USA dollars for international trade. It can be considered that the reason for this decision is because cryptocurrencies are not exchanged through traditional channels like banks and are highly challenging to track, using them in imports is one technique to get around those restrictions on Iran.
Along with the usage of cryptocurrency Smart contracts are anticipated to become more prevalent in international trade as Iran took to circumvent sanctions-related constraints. Iran and Russia have been collaborating more closely recently to lessen the dependency on the US dollar for bilateral commerce and have also suggested launching a new settlement system utilizing their respective currencies.
Because of the availability of cheap electricity in the country, it became the perfect place for crypto miners. Earlier in 2017, the government allowed people to do bitcoin mining but a condition was put that electricity won’t be utilized during the high usage time. According to the blockchain analytics firm Elliptic, Iran became solely responsible for 4.5% of the total bitcoin mining.
In early 2019, they had to restrict the mining process because this was creating a huge impact on the power supply of the country. There were several power outages as the country’s mining population grew. Just last week, Iranian police said that they had seized about 10,000 illegal bitcoin mining equipment over the previous five months, much of which was discovered in public places like schools and mosques, which frequently receive free or discounted electricity.
After this incident, Iran introduced a licensing scheme for bitcoin miners in 2019. It demands registration, the payment of a modest power surcharge, and the selling of all bitcoins mined to Iran’s central bank.
In an interaction with a news reporter at the start of this year, Ali Reza Peymanpak who is the chairman of the Trade Promotion Organization, said, “These cryptocurrencies and blockchain technologies have numerous practical discussions in commercial concerns.” We will lose a significant portion of commercial prospects if we ignore it. He continued, “The use of cryptocurrencies is popular in our core markets, such as Russia, China, India, and Southeast Asia.”
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