Will Re-Ignited U.S. Sanctions on Iran Drive the Country to Cryptocurrency?

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For a technological innovation that ceased to exist a decade ago, the relationship between geo-political events and cryptocurrencies is somewhat uncanny. Whether it’s Venezuela and their controversial Petro Coin, the Marshall Islands installing a legislative framework for the issuance of their own digital tender or the North Korean regime utilizing blockchain technology to fraudulently raise capital – more and more nations are in some way looking at the digital phenomenon to move away from the traditional monetary system.

Next in line – as per a recent guidance notice issued by FinCen – the U.S. based enforcement agency responsible for financial intelligence, could be Iran. In response to Donald Trump’s decision to re-distribute international sanctions on the nation, the report believes that the Iranian government may attempt to use cryptocurrencies as a means to circumvent the embargo.

Iran Cryptocurrency

Within the notice, the financial intelligence unit advise third party cryptocurrency exchanges to take caution with Iran’s potential attempt to exploit the international financial markets, including that of the cryptocurrency markets.

In a rather strong approach, FinCen allege that if U.S. based exchanges fail to thoroughly review transactions that are potentially linked to Iran, then it could assist the regime in their quest to generate revenues that support a range of unsavoury actions. This includes human right abuses, the development of an ongoing missile program and funding terrorist organizations.

Iran and cryptocurrencies

FinCen first made reference to Iran’s involvement in cryptocurrencies back in 2013 and estimates that the nation facilitates Bitcoin transactions to the value of just under $4 million per year. Although the agency recognize that this figure is minute in comparison to other jurisdictions, they are still concerned, insofar that the funds have the potential to end up in the wrong hands. However, as is often the case in an industry that affords users with a certain level of anonymity, the amounts could potentially be much larger.

On top of the nation’s actual usage, Iran have also discussed the potentiality of issuing their own digital currency which will be supported by HyperLedger Fabric technology. Interestingly, although the jurisdiction’s central bank have since prohibited its citizens from purchasing, selling or trading blockchain assets, the central bank have the green light to issue their own digital currencies at will.

What is Hyperledger

Read: What is Hyperledger?

Trump playing hardball with Iran

The re-visiting of U.S. sanctions on Iran has been somewhat controversial across the international community. Whilst the Trump regime officially withdrew the U.S. from the hallmark nuclear agreement that in 2015, re-instated Iran’s ability to access the global payments system and most importantly, access U.S. dollar denominated markets – various other nations have publicly stated that they will continue to recognize the agreement. Specifically, Germany, France and the UK in particular will continue to honor the agreement, in defiance of Trump.

There is an ongoing fear that the sanctions will motivate Iran to seek alternative financial markets in order to protect their national interests. This mainly centres on the exportation of oil, which is somewhat difficult when the industry is mainly dominated by the Petro Dollar. If this is the case, then many believe that Iran may follow the activities of North Korea, which are alleged to utilize cryptocurrencies and blockchain technology in an attempt to generate income for the rogue state.

For example, it was reported in September 2018 that North Korea were using various third party cryptocurrency exchanges to not only launder money, but to evade international sanctions. Ex-NSA cybersecurity expert Priscilla Moriuchi estimates that the program is earning North Korea as much as $200 million annually – no small amount for a nation that struggles to feed its own people.

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Kane Pepi

Based on the Blockchain-Isle of Malta, Kane holds a Bachelor’s Degree in Accounting and Finance, a Master’s Degree in Financial Investigation and he is currently engaged in a Doctorate – researching financial crime in the virtual economy. With a keen passion for research, he currently writes for a variety of publications within the Financial and Cryptocurrency industries. Contact

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