Iran plans to evade sanctions with cryptocurrency

The Central Bank of Iran (CBI) and the Iranian Ministry of Energy have amended laws so that Iran can use cryptocurrency to fund imports. This move by Iran was made to avoid sanctions placed on Iran’s access to foreign currency; such as those put in place by the United States to restrict Iran’s access to the USD.

“The miners are supposed to supply the original cryptocurrency directly and within the authorized limit to the channels introduced by the CBI,” says the official report.

Iran is looking to use cryptocurrencies to obfuscate their paper trails and hide their tracks. Many countries have restricted Iran’s access to foreign currency and aid which puts downward pressure on Iran’s economy and ability to spend and receive outside of their own borders and allies.

It is important to mention that there is a difference between digital currency and cryptocurrency. Digital currencies are compliant with the law, their users must go through AML/KYC procedures, and it can be thought of as a digitized form of money. 

On the other hand, cryptocurrencies are often unregistered securities, with minimal, if any, AML/KYC, that criminals around the world use to separate unsuspecting victims from their money while hiding their tracks or leaving no evidence behind in the process. 

Adding two and two together

Iran’s plan to use cryptocurrency to evade sanctions has been a long time in the making. In February 2020, Iranian officials even encouraged the country to seek unique ways to bypass sanctions. A few months before that announcement was made, the Iranian government legalized cryptocurrency mining.

With hindsight, it makes sense that Iran–who is looking to evade sanctions–legalized cryptocurrency mining. With cryptocurrency mining happening within their own country, Iran has direct access to funds via coins and tokens, some of them privacy-focused, that they can use to make transactions without revealing their identity.