Global cryptocurrency trade has cut ties with Iran after the new US sanctions

November 7, 2018 Others

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A number of cryptocurrency exchanges cut ties with Iran after the United States imposed stricter economic sanctions against the Islamic Republic. Sepehr Mohammadi, head of the Iranian Blockchain Community, told the local media that Binance and Bittrex are some of the platforms to drop Iran unofficially from the list of supported countries to receive services.

Read also: Bitcoin miners crowd Paraguay while the country weighs its development options

Exchanges Imposition restrictions, but Unblocked activities

On 5 November, the United States announced severe economic sanctions against Iran which, with the exception of only eight countries, reduced the rest of the world from the country's oil, maritime and gas markets, including the its financial system. A previous round of sanctions in May targeted the currency, the aviation industry and other sectors of Iran, since President Donald Trump separated from the engagement of his predecessor Barack Obama with Tehran. Measures against the financial system are expected to impede any kind of trade with Iran.

Speaking to IBENA, an Iranian press agency affiliated to the central bank of the country, Mohammadi said that "some virtual currency exchanges have imposed restrictions on Iranian users, but no assets belonging to the Iranians have been blocked". The measures mean that people in Iran will no longer be able to trade cryptocurrencies across borders, limiting trade to an internal market where bitcoins are sold at a significant premium compared to the global average price. It was not immediately clear what other exchanges had stopped providing services to the Iranians.

This will not be the first time that US economic sanctions have hit the heart of the Iranian cryptocurrency industry. In July, after the first round of sanctions, Mohammadi accused Donald Trump's administration of a stifling growth in the Iranian digital currency sector, claiming that the US government has confiscated about 6 million dollars of BTC's ownership Iranian. He said then:

Last year (2017), the significant volume of bitcoins that belonged to some Iranians was confiscated due to non-specific US federal government reasons, and the confiscation process continues.

The president of the Iranian community Blockchain indicated that the owners of the BTC confiscation were not able to take legal action against the United States within Iran, as the cryptocurrencies were banned in the country. In April, the Iranian central bank banned Iranian banks from dealing with foreign cryptocurrencies, citing money laundering and terrorist financing risks, but later annulled the decision after assessing the full effect of the sanctions.

Announcing sanctions on Monday, US Secretary of State Mike Pompeo warned: "It should be noted that if a company escapes our sanctions regime and secretly continues the sanctionable trade in the Islamic Republic, the United States imposes severe and swift sanctions on it, including the potential penalties.I promise you that doing business with Iran by challenging our sanctions will eventually be a far more painful business decision than to completely extract from Iran. "

Digital currency supported by the state

Iran, the third largest oil producer in the world, hopes to exploit cryptocurrencies to compensate for the expected compression of petrodollars resulting from economic sanctions aimed at reducing oil sales from the country, the lifeblood of the economy. Brigadier General Gholam Reza Jalali, head of the Civil Protection Organization of Iran, spoke of the "great opportunities" presented by cryptocurrencies, in the latest indication that Tehran is developing a state cryptocurrency.

"Cryptocurrencies can help bypass certain sanctions through untraceable banking transactions," Jalali told state media in October. He also stressed the need to create a national cryptocurrency that can be used whenever needed. The virtual currency supported by the state will be similar to the bitcoin because transactions are performed on an online ledger called blockchain, but it will not be possible for people to extract it because the infrastructure will be private. The country has also approved plans for the extraction of cryptocurrencies for the national good.

What do you think of the effects of US sanctions on the cryptocurrency industry in Iran? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Global cryptocurrency trade has cut ties with Iran after the new US sanctions

Exchanges Imposition restrictions, but Unblocked activities

Digital currency supported by the state

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