New US Economic Sanctions Leads To Multiple Iran Crypto Exchanges Leaving The Islamic Republic
New Economic Sanctions in US Leads To Withdrawal of Multiple Crypto Exchanges From Iran
In an announcement from the US government, new economic sanctions have been established that will prevent the majority of the world from using many of Iran’s major resources, including their oil, shipping, and gas market. Their financial system is included in these sanctions, and there are only eight countries that are exceptions to the ruling.
This is not the first round of new sanctions that negatively impacted Iran. In May this year, President Donald Trump moved away from the relationship that the Obama administration had with Tehran, targeting aviation, currency, and other sectors in Iran. Whenever any kind of ruling is established against the Iranian financial system, it directly harms their ability to trade with that nation.
As a result of the prohibitions established by the Trump administration, there are many cryptocurrency exchanges withdrawing themselves from the financial economy in Iran. By doing so, they maintain a relationship with the United States and other countries that accept cryptocurrency. Even though the ties severed between Iran and the exchanges are unofficial, some of the projects that withdrew include both Binance and Bittrex.
IBENA, a news agency in Iran that is linked with their central bank, spoke with Sepehr Mohammadi, who is the president of the Blockchain Association in Iran. In an interview, Mohammadi said,
“Some virtual currency exchanges have imposed restrictions on Iranian users, but no assets belonging to Iranians have been blocked.”
Essentially, even though investors still hold the digital assets, they can do no business without going to a domestic market that is not within Iran. So far, a full list of the exchanges that are refusing to interact with Iran has not been put out to the public.
When the first round of sanctions occurred, Mohammadi commented in July that the US President was hurting the growth of their digital currency industry in the country. He even accused the administration of taking $6 million in Iranian-owned BTC, adding,
“Last year (2017), the remarkable volume of bitcoin which belonged to some Iranians was confiscated due to unspecific reasons by the Federal government of the United States, and the process of confiscation is still continuing.”
At the time, the Iranian citizens impacted by the confiscated funds were unable to act, because Iran had a ban on cryptocurrency as a whole. After the sanctions were implemented by the US government, they rescinded the ban.
During the new announcement of the sanctions, US Secretary of State Mike Pompeo was clear in a warning to companies that attempt to “evade” them. He said,
“It should be noted that if a company evades our sanctions regime and secretly continues sanctionable commerce in the Islamic Republic, the U.S. will levy severe, swift penalties on it, including potential sanctions. I promise you that doing business with Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran entirely.”
Iran is well-known as one of the top 3 oil producers in the world, so they are hopeful that they can work out a deal with cryptocurrencies to compensate them for continued relationships in the country. Cryptocurrency offers “great opportunities,” to the public, according to Brigadier General Gholam Reza Jalali, head of Iran’s Civil Defense Organization. This could suggest that Tehran is working on a cryptocurrency that will work at the state level, apart from the United States.
When Jalali spoke with the state media last month, he simply explained,
“Cryptocurrencies can help bypass certain sanctions through untraceable banking operations.”
If they create a new cryptocurrency for the state, it would also be traced on the blockchain, but it would not require mining. So far, Iran’s government has already approved plans for cryptocurrency mining, in the event that it becomes a necessity.