The country secured a $10 million worth order through cryptocurrency, marking an initial step towards trading with digital assets that sidestep the dollar-centric global financial system. This transaction allowed Iran to trade with other sanctioned countries like Russia, bypassing US sanctions.
According to officials, by the end of September, they anticipate widespread adoption of cryptocurrencies and smart contracts in foreign trade with partner nations. The United States has imposed a near-total economic embargo on Iran, including bans on oil imports, banking, and shipping sectors.
Iran’s Cryptocurrency Landscape
In 2021, Iran accounted for 4.5% of global Bitcoin mining due to its cost-effective electricity prices. Mining cryptocurrencies could potentially generate hundreds of millions in revenue that Iran could use to import goods and mitigate the impact of sanctions. However, given the high volatility of cryptocurrencies like Bitcoin, they remain unsuitable for large-scale payments at present.
Nuclear Deal Progress
The European Union proposed a text to revive the 2015 Iran nuclear deal as talks between US and Iranian officials concluded in Vienna after four days. Under the 2015 agreement, Iran scaled back its nuclear program in exchange for relief from sanctions imposed by the US, EU, and UN. However, former President Donald Trump withdrew the US from the deal in 2018, reinstating stringent sanctions that led Tehran to violate the nuclear limits shortly afterward.
Latin American Cryptocurrency Adoption
In 2021, El Salvador adopted Bitcoin as legal tender, despite facing skepticism from the public amidst falling crypto values. Before becoming legally accepted, Bitcoin was already being used for payments at El Zonte Bitcoin Beach. Since then, other Latin American countries like Argentina, Panama, and Brazil have begun exploring regulations on digital assets.
Despite these developments, El Salvador’s economic situation remains challenging due to the recent crypto market downturn. Financial experts from CNBC, CNN, Mashable, and Coindesk suggest that the government’s investment in Bitcoin has not been profitable. As such, relying on cryptocurrency payments domestically or internationally still poses significant risks. Countries like Honduras have launched cautionary campaigns advising citizens of the unreliability of crypto payments.