The order, worth USD 10 million, was a first step towards allowing the country to trade through digital assets that bypass the dollar-dominated global financial system and to trade with other countries similarly limited by US sanctions, such as Russia. The agency didn't specify which cryptocurrency was used in the transaction.
As officials announced, they expect that by the end of September, the use of cryptocurrencies and smart contracts to be widely adopted in foreign trade with their partner countries. The US imposes an almost total economic embargo on Iran, including a ban on all imports including those from the country's oil, banking, and shipping sectors.
In 2021 4.5% of all Bitcoin mining was taking place in Iran, partly because of the country's cheap electricity. The mining of cryptocurrency could help Iran earn hundreds of millions of dollars that can be used to buy imports and lessen the impact of sanctions. However, cryptocurrencies such as Bitcoin are highly volatile, making them impractical for large-scale payments for now.
In 2021 El Salvador also adopted Bitcoin as legal tender, though the project has been beset by public scepticism amid tumbling crypto prices. The El Zonte Bitcoin Beach has accepted Bitcoin as a form of payment even before the country made Bitcoin legal tender. Since then, other Latin American countries such as Argentina, Panama, and Brazil have started to explore the regulation of digital assets.
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