Iran and the use of cryptocurrencies to avoid US sanctions

The recent death of former Iranian president Ebrahim Raisi, called the “butcher of Tehran” due to the numerous executions of opponents ordered in the 1980s, raises considerable concerns about the future evolution of the cryptocurrency landscape in the country.

To date, Iran has been known to use cryptocurrencies to evade U.S. regulations and sanctions, as well as to support the development of the Bitcoin mining industry.

In the Middle East, cryptocurrencies have become particularly important even in the daily lives of citizens who are unable to maintain exchange value after the high inflation of the Iranian rial.

Let’s see how Raisi’s disappearance could have jeopardized the current scenario and how Iran will face political instability.

The death of President Raisi creates uncertainty about the development of the crypto sector in Iran

The unexpected death of Iranian President Ebrahim Raisi, who died in a helicopter accident in the mountainous terrain of the Tabriz region on the border with Azerbaijan, significantly complicates the country’s political and economic situation, especially with regard to the approach to the cryptocurrency sector and the evolution of local regulations.

Given that the economy is already difficult to manage due to increasingly intense US sanctions, the loss of President Raisi could increase the country’s instability, inflaming internal conflicts and social pressure.

In the short term, the chaos could directly lead to disruption of oil supplies, with the country still remaining OPEC’s third-largest exporter in the world, as it did in the past during the Iranian Revolution in 1979, according to Forbes.

As for Iran’s economic strategy, this is clear the incident raises questions about the future direction to take, especially on the technology front.

Just a week ago, the Central Bank of Iran approved a pilot program for the enhancement of digital assets and CBDCs, and its debut was scheduled for June 21, which marks the beginning of the Iranian calendar month of Tir, but now all plans may be put on hold.

Moreover, the death of Raisi, one of the most influential figures in Iranian politics, 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.

It is certain that its decomposition, ends the era of suppressing dissentin which thousands of political opponents and prisoners of war were brutally sentenced to death and subjected to physical and mental torture.

According to Washington documents, in 2019 the US Treasury Department imposed sanctions on Raisi for:

“H“is the administrative supervision of the execution of minors at the time of committing a crime and of torture and other cruel, inhuman or degrading treatment or punishment of prisoners in Iran, including amputations.” .

The throne of Supreme Leader passes to Ali Ḥoseynī Khāmeneī, a famous religious politician who served as president from 1981–1989.

Iran Bypasses US Cryptocurrency Regulations: Focus on Mining

Iran is famous for repeatedly bypassing the so-called long-term American sanctions and regulationsthat has oppressed trade in the Gulf country through the use of cryptocurrencies.

Western sanctions have been putting Iran’s autonomy to the test for years, harming oil exports, financial exchanges and key industries.

To mitigate the negative effects, the country started trading abroad with P2P cryptocurrency exchangesthat do not involve a central bank entity and are therefore exempt from potential international censorship.

According to Chainalytic, a blockchain analysis company, Iran is the hero of a strong campaign to finance terrorism and drug trafficking thanks to cryptocurrencies that have enabled free exchange around the world.

The Iranian government, noting positive economic impacts for the country, has supported (albeit with ups and downs) the country’s crypto industry, approving cryptocurrency mining as a legal commercial activity in 2019 and issuing over 1,000 licenses to inject capital into the heavily sanctioned country.

By becoming a Bitcoin mining center thanks to ultra-low energy costs, the Middle Eastern nation has followed suit Russiaalso threatened by the oppressive laws of the United States.

In any case, we note how Iranian Bitcoin mining has been restricted in recent years, both due to energy turmoil in the wake of advanced illegal mining and due to the development of other international markets.

Bitcoin mining in Iran currently accounts for 0.2% of the supply chain, down 7% from 2021, according to the Cambridge Center for Alternative Finance (CCAF).

It remains to be seen how the mining sector will evolve after Raisi’s death and whether this type of market will be supported to alleviate unstable domestic economic conditions.

Bitcoin a safe haven in Iran after rising inflation

In such a complex context, where the political instability caused by Raisi’s death coexists with the weakening economy caused by strict Western regulations, Iran’s state currency can only suffer losses.

All these events led to significant devaluation of the Iranian rialwhich faced strong waves of inflation, forcing citizens to resort to the use of cryptocurrencies to mitigate the damage.

Bitcoin in particular, as has been the case in the past in other countries such as Nigeria, Argentina, El Salvador and others, helps society maintain economic value by acting as a true safe haven like gold.

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

As a decentralized digital currency, Bitcoin offers unique attributes that make it an interesting option during times of geopolitical tensionespecially when inflation in a country like Iran exceeds double-digit percentages, threatening to ruin the sacrifices of millions of people.

“Bitcoin again”fix the problem”!