Iran's Trade Promotion Organization (TPO) says the country will soon start using cryptocurrency to pay for imports.
Alireza Peymanpak, the TPO chief, said that the Central Bank of Iran has issued permission for using cryptos for importing goods. "The final decision will be taken by the Economy Ministry," IBENA quoted him as saying on Sunday.
According to Paymanpak, a specialized platform is in place to connect businesses in Iran to foreign suppliers. "Businesses can use the platform to transfer cryptocurrency to settle import bills."
"A platform was necessary to facilitate money transfers by supplying exporters with cryptocurrency. The platform is also linked to the Comprehensive Trade System and CBI's Currency Allocation Platform."
Use of cryptocurrency was expected to be launched last fall but was delayed due to the prolonged process of developing the platform, Peymanpak said.
Back in September, the official said in a tweet that the country is targeting implementation of smart contracts in foreign trade by October. He did not elaborate.
Ahmad Salehi, an advisor to the TPO, said last week that the groundwork has been prepared for using cryptocurrency in foreign trade. "We have reached [preliminary] agreements and permits have been issued for using cryptos for import and export."
In January, the CBI and the Ministry of Industries, Mining and Trade reached agreement to link the CBI crypto platform to the Comprehensive Trade System allowing businesses to use cryptocurrency to settle overseas payments.
Peyvast magazine claimed that that measure was halted due to the CBI's opposition. However, unofficial reports indicate the central bank has approved the measure. The CBI has not commented so far.
Peymanpak said earlier “There may be restrictions for using cryptos when dealing with some countries like Iraq, Afghanistan and Pakistan." However, the digital currency can help Iran in export destinations where crypto is used such as Russia, China and India, he noted.
Blockchain and cryptos have many uses in international trade and finance, he noted. "We stand to lose if we fail to employ new technologies” in trade with the outside world.
Evading Sanctions
After former US president Donald Trump waked away from the Iran nuclear agreement and imposed sanctions in 2018, the CBI was urged to allow the use of blockchain technology to help evade the unilateral US economic blockade.
That year the Majlis Research Center called for the targeted use of cryptocurrency to circumvent the hostile Trumpian restrictions.
The World Trade Organization has said blockchain could revolutionize global trade completely. A 2018 WTO report noted that international trade could look “radically different” in 10 to 15 years.
Seeking Alternatives
After sanctions were announced on Russia for invading Ukraine in February 2022 that cut off Russian banks’ access to SWIFT, Tehran and Moscow are in the process of creating a rival to SWIFT for cross-border payments. Central banks of the two countries are also working on connecting their domestic bank card networks.
At the same time, blockchain policymakers and developers in the two countries are considering blockchain and crypto as an alternative for two-way trade.
Anton Tkachev, deputy of the Russia’s State Duma, said during a visit to Tehran that the both sides have the technological potential for crypto collaboration.
Victor Goncharuk, vice-president of the Russian Association of Crypto Industry and Blockchain, said Iran has made progress in terms of technical issues and called for creating a joint payment system for bilateral transactions.
"By enhancing collaboration in crytpo exchanges and blockchain technology, Iran and Russia can develop a joint ecosystem," he said.
The International Monetary Fund said in April that countries such as Russia and Iran may eventually resort to cryptomining to evade sanctions.
There’s a risk that sanctioned nations will leverage their energy resources -- which can’t be exported -- to power mining, an energy-intensive process of validating coin transactions, the IMF said.
By expanding their mining operations, governments could also generate revenue directly from transactions fees, the fund said.
Iran’s first vice president, Mohammad Mokhber, in November announced new rules for crypto assets in addition to those approved in 2019.
Per the rules, cryptominers must get special permits from the Ministry of Industries, Mining and Trade for importing equipment plus the approval of the Iran Standard Organization for using them.
Later, the government outlined details about supplying power to the miners. Licensed miners have been given options for accessing electricity for their farms, including the establishment of on-site renewable power plants, or using their own small power generators.
Miners using electricity and natural gas pay their bills based on energy export tariffs and must reduce operations by half in the summer season when power use is at its peak.
Electricity prices for cryptomining are subject to currency rates at Nima – the currency platform where forex is purchased by importers from exporters.
New rules require the ministries of oil and energy to announce power rates on a quarterly basis and inform miners about peak season adjustments in advance.
In the previous regulations, tax breaks were offered to miners who repatriated their earnings to the country. However, the government later decided to remove the exemption and treat cryptominers like all other exporters.
