Circumvention of US sanctions: Iran pays order with cryptocurrency

In order to circumvent US sanctions, Iran is taking a new approach.

Circumvention of US sanctions: Iran pays order with cryptocurrency

In order to circumvent US sanctions, Iran is taking a new approach. For this, the Islamic Republic pays for imports with cryptocurrency. It is unclear which digital money was used. Iran plans further trading of digital assets.

Iran this week placed its first official import order in a cryptocurrency. The contract is worth $10 million, according to the semi-official agency Tasnim. It is a first step in circumventing US sanctions designed to cripple the Islamic Republic's economy. It is not known which digital money was used in the transaction.

“By the end of September, the use of cryptocurrencies and smart contracts in foreign trade with destination countries will be widespread,” wrote an official at the Ministry of Industry, Mines and Trade. Trading digital assets aims to bypass the dollar-dominated global financial system and allow trades with other countries also restricted by US sanctions - such as Russia.

According to a study published last year, 4.5 percent of the dominant cryptocurrency Bitcoin was mined in Iran. One reason for this is the comparatively cheap electricity, since so-called mining consumes a lot of electricity. Digital mining could help Iran make hundreds of millions of dollars. However, the prices of cryptocurrencies such as Bitcoin fluctuate greatly and have not caught on in payment transactions.

In 2018, then US President Donald Trump withdrew from the 2018 nuclear deal with Iran and imposed tough sanctions. Tehran began violating the conditions the following year. Recently there has been some movement again in the efforts to revive the agreement between Iran and the five UN veto powers and Germany. The EU expects a "very quick" decision.

The European Union has presented a "final text" to restore the international pact of 2015, said EU foreign policy chief Josep Borrell. "What can be negotiated has been negotiated." Indirect talks between the United States and Iran had previously ended in Vienna. The United States showed itself ready for a speedy conclusion. Iran pointed to the need for further internal consultations.