Iran has started using crypto-currencies to settle cross-border trade deals, as the country continues to find ways to avoid using the US dollar and the international banking system.
In a tweet on August 9, Ali Reza Pemenpak, head of the Iran Trade Promotion Organization (ITPO), said the first official import order using the crypto-currency has been placed “this week”.
Paymanpak, who is also deputy minister of industry, mines, and trade, did not say what goods or services were being traded, or with whom the trade was, but said the deal was worth $10 million.
He further said the use of cryptocurrencies and smart contracts will become “widespread in foreign trade” with some countries in the near future.
It follows news last month that Iran and Russia have taken steps to reduce the use of the dollar in their bilateral trade by introducing a settlement system using their own currencies.
In 2019, the Central Bank of Iran banned the trade of cryptocurrencies inside Iran. The country’s power network has come under tremendous pressure at times due to the large-scale ‘mining’ of cryptocurrencies in the country, which led to widespread blackouts. However, the government allows Bitcoin and other cryptocurrencies to be used for international trade, which is used in the U.S. Sanctions are as a way to prevent them.
In January, Iran’s Mehr news agency reported that a deal had been struck between the ITPO and the country’s central bank to allow the use of cryptocurrencies in cross-border trade, which said at the time that the system would be operational and running “in the next two weeks”.
“These crypto-currency and blockchain systems have a lot of practical discussions in business matters,” Paymanpack told Mehr in January. “If we ignore it, we will lose a large part of business opportunities,” he said, adding that “the use of cryptocurrencies is popular in our major markets like Russia, China, India, and Southeast Asia.”
The crypto-currency may be useful for Iranians trying to avoid sanctions, but strict action is being taken by U.S. authorities wherever they can. The New York Times reported in July that cryptocurrency exchange Kracken is under federal scrutiny because of suspicions that it allowed users in Iran to buy and sell digital tokens. Another exchange, Binance, has also faced allegations that it processed trade by customers in Iran despite international sanctions.