Iran's Central Bank intends to eliminate the influence of the US dollar, and Bitcoin may become a good way to deal with economic sanctions

In February, Valiollah Seif, the governor of Iran’s central bank, publicly stated that Iran will gradually reduce the use of US dollars in the country. The economic transformation of this Middle Eastern country has made the region a hotbed for the development of Bitcoin.

Bitcoin’s censorship resistance

Over the past few years, it has been believed that Iran would be the biggest beneficiary of Bitcoin’s censorship resistance. Because of the sanctions imposed by the United States on Iran, Iran has had to endure strict economic and trade bans. Many other countries have also chosen to side with the United States, and the United Nations Security Council (UNSC) has exerted a lot of pressure on this.

Due to the strict economic sanctions, the topic of Bitcoin and Iran made headlines in Bloomberg in 2012. The article mentioned that "Iranians facing dollar shortages have discovered virtual currencies." The value of Bitcoin has increased in Iran because they can use the digital currency freely abroad. Bitcoin consultant Farzad Hashemi said that Iranians are surprised by how Bitcoin makes their overseas spending more convenient.

When they realized that Bitcoin could solve their problems, they were immediately hooked.

Bitcoin in Iran

The legal status of Bitcoin in Iran is unclear, as the government has not taken any political stance on the topic of decentralized currencies. Currently, most Iranians use Localbitcoins or Coinava. As a P2P Bitcoin trading platform, Coinava has been providing services to Iranians since 2013. This Iranian Bitcoin platform holds transaction funds as a custodian and charges a 1% fee for each transaction.

In addition, the number of users in Bitcoin Iran Facebook groups has exceeded 31,000, and there are irregular Bitcoin gatherings. Persian Leather Shoes, an Iranian shoe company, only accepts Bitcoin payments. They explained the purpose of choosing this business model on their official website:

We hope to sell our products overseas and expand our customer base. The problem is that our company is located in Iran, and most payment systems are unwilling to cooperate with us or may bring great risks to our business - and now, with the help of Bitcoin and the Bitcoin community, we hope to become a benchmark for other small domestic businesses to expand global customers.

Trading Bitcoin on Tehran Exchange

Last week, local Iranian media reported that Swedish company Brave New World Investments (BNW) plans to use cryptocurrency to help Iran bypass trade sanctions. The startup aims to support its operations solely with Bitcoin and use Bitcoin to trade stocks on the Tehran Stock Exchange (TSE).

BNW said that the reason they started this business was that most Swedish banks were "afraid" of doing business with Iranian financial institutions. BNW founder Mikael Johansson said that they would run the company entirely on cryptocurrencies with their partners and European shareholders.

We currently do not have a Swedish bank account. However, we will soon open an Iranian bank account for equity investment. All our bills, shareholder dividends, deposits, etc. will be paid in cryptocurrencies. There are no restrictions on companies investing in Iran in Sweden or the EU, so we are not breaking any laws.

As for whether the US sanctions on Iran will be escalated, Johansson said:

I think a company that doesn't have visibility into who they are dealing with in bitcoin could run into sanctions issues. To prevent that, we provide audit services during the transaction process.

Bitcoin’s censorship-resistant nature is a boon to Iranians and those looking to do business in the Middle Eastern country. As the central bank gradually removes the influence of the U.S. dollar in Iran, Iranians will discover the unique advantages of Bitcoin.