Iran to Allow Businesses Use Cryptos for Int’l Settlements

EghtesadOnline: The Central Bank of Iran and the Ministry of Industries, Mining and Trade have reached agreement to link the CBI crypto platform to the Comprehensive Trade System, which allows businesses make use of cryptocurrency to settle payments to foreign partners, the head of the Trade Promotion Organization of Iran said.

News ID: ۷۸۷۶۱۱

11 January 2022

"We are finalizing a mechanism for operations of the system. This should provide new opportunities for importers and exporters to use cryptos in their international deals," IBENA quoted Peyman Pak as saying.

No further details were available.

"Businesses face no restrictions in using cryptos in international deals," Pak said

"There may be restrictions for using cryptos when dealing with some countries like Iraq, Afghanistan and Pakistan," he said, noting that these could help Iran expand its foothold in specific export destinations where cryptocurrency is used and accepted, such as Russia, China and India.

Blockchain and cryptos have many uses in international trade and finance, he noted. "We stand to lose if we fail to employ new technologies” when trading with the outside world.

Mining virtual currency is legal in Iran and miners are allowed to operate under rules approved by the government in 2019. However, trade in cryptocurrency is banned for domestic payments.

Back in October 2020, the government ratified regulations for legal cryptocurrency mining that allowed digital currency to be used for imports. The measure, proposed by the CBI and Ministry of Energy, required cryptominers to sell the coins they mine only to the CBI.

Last April the CBI said henceforth banks and licensed moneychangers may use cryptocurrency mined by authorized miners in Iran to pay for imports.

Bypassing Trump’s Blockade

After former US president Donald Trump withdrew from the Iran nuclear agreement and imposed sanctions in 2018, the CBI was urged to allow the use of the blockchain technology to help evade the tough economic restrictions.

In a 2018 report, the Majlis Research Center called for the targeted use of cryptocurrency to circumvent the Trumpian economic blockade.

However, economists and market analysts argue the Iran’s commercial and financial transactions are big to be handled efficiently with the help of cryptocurrencies.

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. Before looking at how this could be, here’s a quick overview of both cryptocurrency and blockchain.

Using cryptos businesses can trade with the same currency no matter where they are in the world, without using third-party institutions, namely banks. Blockchain transfers payments more quickly and cheaply than currently used networks such as SWIFT.

It also reduces transaction time. Blockchain commissions are lower and without maximum limits, which is especially advantageous for exporting SMEs

Blockchain technology can help eliminate many of the issues of fragmented manual processes. It can record all transactions between shipper and receiver, track goods and offer a transparent system for all document management in the supply and transport chain. Each transaction, each point along the destination, can be recorded and validated via an immutable ledger.