Iran and the use of cryptocurrencies to evade US sanctions

The recent death of the now former president of Iran Ebrahim Raisi, nicknamed “the butcher of Tehran” due to the numerous executions of his opponents ordered in the 1980s, raises many concerns for the future evolution of the cryptocurrency landscape within the Village.

To this day, in fact, Iran is known to exploit cryptocurrencies in an attempt to evade US regulations and sanctions, and to support the growth of the Bitcoin mining industry.

In the Middle East, cryptocurrencies have taken on a particularly important value also for what concerns the daily life of citizens, unable to maintain their exchange value after the heavy inflation of the Iranian Rial.

Let’s see how Raisi’s disappearance may have compromised the ongoing scenario and how Iran will face political instability.

The death of President Raisi creates uncertainties for the development of the crypto sector in Iran

The unexpected death of Iranian President Ebrahim Raisi, who died in a helicopter crash in a mountainous area of ​​the Tabriz region, on the border with Azerbaijan, significantly complicates the country’s political and economic landscape, especially with regards to the approach to the sector of cryptocurrencies and the evolution of local regulations.

With an economy already difficult to manage due to increasingly intense US sanctions, the loss of President Raisi could increase the country’s instability by triggering internal conflicts and social pressure.

In the short term, the chaos could lead directly to business disruption oil supplies, as the country is still the third OPEC exporter in the world, just as happened in the past during the Iranian revolution of 1979, according Forbes.

As for Iran’s economic strategy, it is clear the incident raises questions about the future direction to pursue, particularly on the technological front.

The pilot program for the valorization of digital assets started just a week ago CBDC has been approved by the Central Bank of Iran, with the debut scheduled for June 21, marking the start of the Iranian calendar month of Tir, but all plans may now be on hold.

Furthermore, as one of the most influential figures in Iranian politics, Raisi’s death not only disrupts the nation’s internal dynamics but also affects its foreign relations and economic strategies, with international regulations likely to become more stringent for the country.

What is certain is that its decay, it ends an era of repression of dissentwhich saw thousands of political opponents and prisoners of war brutally sentenced to death and subjected to physical and psychological torture.

As reported by Washington documents, in 2019 the United States Treasury Raisi sanctioned for:

“its administrative oversight over the executions of persons who were minors at the time of the crime and for torture and other cruel, inhuman or degrading treatment or punishment of prisoners in Iran, including amputations”.

The throne of Supreme Leader passes to Alī Ḥoseynī Khāmeneī, a well-known religious politician who held the position of president from 1981 to 1989.

Iran circumvented American regulations with cryptocurrencies: focus on mining

Iran is famous for having repeatedly bypassed the long-standing sanctions and US regulationswhich oppressed the trade and commerce of the Persian Gulf country, thanks to the use of cryptocurrencies.

Western sanctions have been testing Iran’s autonomy for years, hurting oil exports, financial trade and key industries.

To mitigate negative effects, the country has started trading abroad with P2P cryptocurrency exchangeswhich do not involve a central banking body and are therefore free from potential international censorship.

As reported by the blockchain analytics company CatenaanalysisIran has been the protagonist of a strong campaign of financing terrorism and drug trafficking thanks to cryptocurrencies, which have allowed free trade worldwide.

The Iranian government, noting the positive economic effects for the country, has supported (albeit with ups and downs) the crypto industry in the country, approving cryptocurrency mining as a legitimate business activity in 2019 and issuing over 1,000 licenses bring capital into the heavily sanctioned country.

Having become a hub for Bitcoin mining thanks to its very low energy cost, the Middle Eastern nation has followed in the footsteps of Russiaalso compromised by oppressive United States regulations.

In any case, we would like to point out that Iranian Bitcoin extraction has been reduced in recent years, both due to the energy turbulence resulting from advanced illegal extraction and the growth of other international markets.

According to the Cambridge Center for Alternative Finance (CCAF) currently the Bitcoin mining in Iran it represents 0.2% of the supply chain, down 7% compared to 2021.

We will see how the mining sector will evolve after Raisi’s passing and whether this type of market will help alleviate the unstable internal economic conditions.

Bitcoin as a Safe Haven in Iran After Rising Inflation

In such a complex context, which sees the political instability due to Raisi’s death competing with the weakening of the economy due to stringent Western regulations, Iran’s state currency cannot help but suffer the blow.

All these events led to significant devaluation of the Iranian Riyalwhich has faced heavy inflation, prompting citizens to resort to cryptocurrencies to mitigate the damage.

In particular, Bitcoin, as has happened in the past in other countries such as Nigeria, Argentina, El Salvador, and others, helps the population maintain economic value by acting as a real safe haven like gold.

Unlike physical gold, however, it is more complex to seize as it lives in a digital cryptographic environment, and in recent years it has also achieved higher returns.

As a decentralized digital currency, Bitcoin offers unique attributes that make it an attractive option during times of geopolitical tensionespecially when inflation in a country like Iran exceeds double-digit percentages, risking nullifying the sacrifices of millions of inhabitants.

Once again, Bitcoin “solves the problem”!

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