A $10 million import in crypto
Like El Salvador and the Central African Republic, Iran sees crypto as a life-saving solution to develop its economy. Under numerous international restrictions, the country is looking to take advantage of digital assets, with a view to trading with “target” countries, according to the statement of Alireza Peyman-Pak, head of the Iranian Trade Promotion Organization (TPO).
For the official, an initial official import order was reportedly placed using cryptocurrencies, worth $10 million. By September, more similar transactions will be carried out by the country.
This was the first time Iran made an international payment using cryptocurrency. Iranian Deputy Minister Alireza Peyman-Pak of Industry, Mining and Trade said in a tweet on August 9:
By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade.
Cryptos for cross-border payments
This is a very important announcement for the country and for other countries in the region that has been heavily reported in the media. After the legalization of bitcoin in El Salvador and the launch of the first state-owned cryptocurrency (Sangocoin) in the Central African Republic, cryptos are becoming increasingly accepted by governments.
The country wanted to let the world know that Iran was on its way to generalizing the use of cryptos in the country, and in particular, for cross-border payments.
Iran has been hit by economic sanctions for decades. In fact, before Russia entered into conflict with Ukraine, it was the most sanctioned country in the world. The majority of its imports come from China, the United Arab Emirates, Turkey and India.
However, this is not the first time Iran has been “tolerant” of cryptocurrencies. Since 2017, the government had regulated the bitcoin mining industry. Then, in 2020, the country had amended its legislation to attract more mining companies to set up shop in the country. By 2021, more than 30 business licenses had been issued to Iranian miners.
Bitcoin and other cryptocurrency mined from mining farms in Iran is then sold mainly to the Iranian central bank. The central bank now has the funds to pay for its international imports.
Thus, the recent payment of 10 million dollars paid in cryptocurrencies comes – presumably – from mining farms installed in the country.
In addition to cross-border payments, Iran is also considering creating its own digital currency (CBDC). This would be based on Hyperledger Fabric technology.