Iran’s citizens are straining under the weight of aggressive financial sanctions as result of its nuclear initiatives. Cryptocurrencies like Bitcoin provide a circumvention solution.
Even though Bitcoin continues its somewhat volatile price jumps, it is still a desirable asset for investors around the world. Since its phenomenal growth last year, people are buying and holding until it reaches even greater heights.
BITCOIN IS NOT JUST SOMETHING TO HODL ONTO
According to The Hill, however, for the citizens of Iran, it is more than just a store of value. Hadi Nemati, a cryptocurrency researcher in Iran working at Blockchain Match, explained:
“Visa, Mastercard and everything in the outside world is working well, but in Iran, because of the embargo, we don’t have access to these tools”.
“In most of the world, Bitcoin is more of a store of value, but in Iran it’s a utility because it gives us access to the world economy. Iranians buy Bitcoin because they don’t have access to international fiat currencies”.
IRAN CATCHES CRYPTO FEVER
However, it is not just Bitcoin garnering the interest of Iranians. Citizens are paying attention to the whole crypto industry. Ziya Sadr, a cryptocurrency researcher in Iran, gave some more insight:
“I attended a conference a few months ago, the first national cryptocurrency in Iran. Most of the people had no idea what blockchain and Bitcoin was”.
He added that there was now a greater level of awareness.
Because digital currencies are decentralized and do not answer to anyone, let alone the government, it truly gives crypto holders autonomy over their own money, regardless of whether or not any additional sanctions are imposed. Also, it is an efficient way to execute cross-border payments, again giving Iranians access to the rest of the financial world without the interference of governments.
Cryptocurrencies aren’t just useful for evading sanctions. It offers a measure of financial security in countries where the economic environment is anything but stable, like in Venezuela and Zimbabwe. It’s no surprise then that crypto acceptance has increased dramatically in these countries.
David Yermack, a finance professor at New York University’s Stern School of Business, noted:
“You see cryptocurrency adoption in a lot of countries where the banking system has failed”.
He cited China as an example:
“I think actually China has a banking system that everyone understands to be troubled and people want to get money out of it. It’s a way to evade that”.
IRANIANS USE CRYPTO AT THEIR OWN RISK
Iranians have previously staged political protests as a result of the country’s economic decline. Coin Dance shows that Iran had its highest Bitcoin trading volume before and during these protests.
However, dealing in crypto could make Iranian adopters vulnerable to prosecution. Yermack explained:
“A lot of these currencies have blockchains that are completely transparent and you can monitor them. It’s a double-edged sword. It gives liquidity to people in these countries but it also gives the government a way to prosecute them”.
Prosecution isn’t a stretch of the imagination in a country where arresting journalists and political protestors has become the norm.
SANCTIONS FILTER INTO THE SANCTUARY OF CRYPTO
The crypto industry is not entirely untouched by sanctions though. US-based international exchange, Bittrex, has frozen a number of Iranian accounts, possibly worth millions of dollars. According to the exchange, many of these accounts were subject to the US-imposed sanctions.
“All Iranians who had accounts on Bittrex were all disabled and suspended. It’s been more than four months that there has been no response”.
Bittrex, however, had this to say:
“The accounts at issue, fewer than 0.01%, will remain suspended, pending direction from the US Office of Foreign Assets Control.”
TAKING THE GOOD WITH THE BAD
Despite the Bittrex debacle and the threat of being discovered by the authorities, it seems as if turning to crypto is the only way for Iranian adopters to be a part of the global economy in some way.
Crypto usage could even increase if the United States’ President Trump re-implements previously lifted sanctions on Iran.