When the Ministry of Commerce formally approves the use of cryptocurrencies for foreign trade, Iran will be the first of its kind in the world.
The obvious problem with the news is that the country’s innovation policy is clearly aimed at circumventing the economic sanctions that have hindered the country’s participation in the global economy for years.
These circumstances set a paradoxical tone for the Iranian experience – while for some, the ability of cryptocurrencies to break free from the real dominance of the political will of the United States and the international financial institutions that enforce it may prove to be proven, hardened. Crypto skeptics may have proof. They need your prophecies that decentralized digital assets will become the weapon of choice to destroy the fragile world order.
Despite the ethical debate, it remains curious to know exactly how this strategy will work, what impact it will have on Iran’s trading partners, and what challenges it will pose from hostile law enforcement agencies.
The first public announcement of a trading system that allows local businesses to make cross-border payments using cryptocurrencies was made in Iran in January 2022. Then the Deputy Minister of Industry, Mining and Trade of Iran, Alireza Peyman Pak, spoke of “new opportunities” for importers and exporters of this type.
All financial entities can use these cryptocurrencies. The trader takes rubles, rupees, dollars or euros, which he can use to receive a cryptocurrency such as bitcoin, which is a form of credit and can be transferred to the seller or importer. […] Since the cryptocurrency market is run on credit, our financial actors can easily take advantage of it and use it on a large scale. ”
In August, Peyman-Pak reported that Iran had submitted its first import request using cryptocurrency. Without giving any details about the cryptocurrency used or the imported goods involved, the official said the $10 million claim represents the first of several international transactions to be settled in cryptocurrencies, with plans to increase during September.
On August 30, Trade Minister Reza Fatemi Amin confirmed that detailed rules for the use of cryptocurrencies in trade have been approved. Although the full text is still not available online, local businesses should be able to import cars and a variety of imported goods into Iran using cryptocurrencies instead of US dollars or euros.
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Meanwhile, the local business community has raised concerns about the possible design of the policy. Alireza Managebi, head of the Iran Importers Group and representatives of foreign companies, emphasized that stable rules and infrastructure must be prepared for the successful use of cryptocurrencies in imports. There is also a potential risk of a new push, which will lead to the emergence of rent-seeking commercial groups.
How will it work?
Babak Behboudi, co-founder of the digital asset platform SynchroBit Hybrid Exchange, told Cointelegraph that although the official policy has only been approved in recent years, the Iranian government and companies have been using cryptocurrencies as a payment method for several years now. . . Currently.
But there are a number of reasons that led the government to recognize such practices on a national scale, such as the frustration of Iranian negotiators in reaching a winning deal with the West on a nuclear deal, frustration with the economy and hyperinflation. in the local market.
Behbudi added that such a decision is strongly influenced by the rise of the Chinese digital yuan and the geopolitical conflict between Russia and Ukraine.
The question of the effectiveness of the new strategy is still open. Almost any potential foreign partner will face difficulties in carrying out cryptocurrency transactions, since, unlike Iran, in most countries there is no legal framework for the use of cryptocurrency as a business payment method or, in the worst case, a complete ban. The pseudonymous nature of Bitcoin and other major cryptocurrencies do not give potential partners too much confidence that they are invisible to US financial authorities.