[2022-08-09] Iran makes first import order using cryptocurrency

[NeuroticFish]

https://www.reuters.com/business/finance/iran-makes-first-import-order-using-cryptocurrency-tasnim-2022-08-09/

According to Reuters (who is citing another agency), Iran has made this its first official import order using cryptocurrency. It's an order that worth $10M. It doesn't tell it was Bitcoin or not though, and the following part makes it even more confusing:

"By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries," an official from the Ministry of Industry, Mine and Trade said on Twitter.

I'm not even sure whether I should be happy or unhappy about this news, but certainly it's far from unexpected. It's... part of the adoption...

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[SFR10]

It doesn't tell it was Bitcoin or not though,

Considering that they modified the law a couple of years ago to "only allow legally mined cryptocurrencies for funding import orders" and also the fact that at some point in last year, they had 4.5% of the market share for mining BTCitcoins, I have a strong feeling the order in question was probably made with BTCitcoins.

and the following part makes it even more confusing:
~Snipped~

It appears that they'd probably expand its coverage to CBDCs and smart contracts ^{[not sure if it's feasible, but IIRC, a few years back they had some plans with China and Russia]}.

[pooya87]

Unfortunately this whole news is based on a very vague tweet and the media went nuts over it

My guess is that this is either about using bitcoin considering the fact that for a couple of years there has been talks about using bitcoin (earned from mining) for imports and there has been rumors about it being used.

Or there is a higher chance that it is Iran's CBDC called CryptoRial which was supposed to start operating this year and a little more than a week ago the Russia’s State Duma showed interest in using it.

[LeGaulois]

Whatever if it's about using Bitcoin or the cryptorial, isn't it a useless move if the goal is really to avoid the economic embargo on Iran?

My logic:
The U.S. sanctions apply to companies and financial institutions that want to trade in USD with Iranian companies/banks. Not only USD by the way, but it's also about gold, silver, and of course in Rial.
The only thing the U.S. has to do is to add cryptocurrencies to this list and bingo: blocked again

Who would like to still trade with something in Iran knowing The extraterritoriality of American law

[pooya87]

Whatever if it's about using Bitcoin or the cryptorial, isn't it a useless move if the goal is really to avoid the economic embargo on Iran?

The main goal is to abandon US dollar as trade/reserve currency rather than being to circumvent sanctions since there are a million ways of doing that already.

In fact there was a press conference last night with some additional information which I try to translate here.
Basically I'd say the goal is providing a much better alternative to SWIFT with real security considering any money sent through SWIFT can be stolen by SWIFT! For example for the past couple of years about $7 billion of Iran's money is stolen by South Korea through SWIFT and they are refusing to give it back.

"The goal is to replace LC with smart contracts using the blockchain technology (without needing a third party) to handle payments for import/exports and have better guarantees from the other party. Basically replacing SWIFT."

From what I understand there is going to be a domestic centralized exchange where miners could deposit their bitcoins (apparently not limited to miners only). They can either sell it there and receive fiat or CryptoRial or credit for imports through the provided channels.

The target for imports is said to be "places where mining and using cryptocurrencies are common" naming "Russia, India, China and South East Asia".

The article still didn't mention what cryptocurrency was used or whom was the $10 mil trade with.

[NeuroticFish]

Or there is a higher chance that it is Iran's CBDC called CryptoRial

This is something I don't understand. They can very well use any kind of IOUs in the same way, I don't see why CryptoRial is seen as a good choice. I mean, Iran can declare in any second they no longer recognize CryptoRial and other states get scammed. (I know, it's not very likely, but still... Bitcoin is safer option)

any money sent through SWIFT can be stolen by SWIFT

With most of Russian banks being locked out of SWIFT, of course they are scared they'll face the same. The "stolen" part may be more a story for the public.
Even more, by avoiding SWIFT they can also (re)sell Russian oil they may get at discounted price.

The only thing the U.S. has to do is to add cryptocurrencies to this list and bingo: blocked again

Actually with crypto it won't be that easy, since one can buy/sell crypto P2P, avoiding the centralized platforms that enforce US rules.

[cr1776]

...
Actually with crypto it won't be that easy, since one can buy/sell crypto P2P, avoiding the centralized platforms that enforce US rules.

Exactly. More importantly, once there is a critical mass in crypto, people won't have to trade in and out of it, they'll just settle up in crypto.  Then there is much less need for an exchange whether p2p or centralized.  This type of use if it is even real is a first step in having large amounts remain in crypto.  If you buy something from ABC and they immediately trade it for fiat, what's the real point?

The more controls that are put in place the more likely it is to occur.  For example, when Stripe and PayPal banned the Trump campaign in Jan 2021, the obvious answer was to just switch to crypto.  Ditto for other places that are getting hit by Visa such as pornhub's parent company.  Ditto for banks that are denying loans to firearms companies, gun shops or oil companies.  Ditto companies that are being black listed (or grey listed) on ESG grounds.   Jen Psaki said that people who spread “misinformation” “shouldn’t be banned from one platform and not others.”  She wasn't talking about just social media, she was talking about the entire realm of the digital world including online payments etc too. 

The end result of this will be to drive people to places that don't want to or aren't able to censor them and crypto is one place they'll end up because while it is nice to see "free speech alternatives" to some of these things, as long as they are centralized, they are subject to legal pressure.

(No comment on whether this is a good thing or not with regard to it being Iran of course).

[pooya87]

This is something I don't understand. They can very well use any kind of IOUs in the same way, I don't see why CryptoRial is seen as a good choice. I mean, Iran can declare in any second they no longer recognize CryptoRial and other states get scammed. (I know, it's not very likely, but still... Bitcoin is safer option)

Bitcoin is a good option for us (regular people), the governments want to have full control but they can't control anything about bitcoin. That includes the price which is volatile and that makes it a less desirable option for big trades.
But a gov-coin or CBDC is basically the same as fiat, they can control everything about it just like the existing banking system.

of course they are scared they'll face the same. The "stolen" part may be more a story for the public.

The amount I mentioned above was the total in multiple countries not SK alone ($7 billion in SK), and it is not a "story", there has been a long conflict over this money for the past 4 years and they still haven't given it back simply because US doesn't let them!
This is for example part of this long drama last year:
https://www.forbes.com/sites/dominicdudley/2021/02/24/south-korea-agrees-to-unfreeze-1-billion-in-iranian-assets-following-tanker-seizure-by-tehran/

[Kakmakr]

Well, we all know that Iran are still being sanctioned by the US, as we can see from this article a week ago ==> https://www.thenationalnews.com/world/us-news/2022/08/01/us-slaps-fresh-oil-sanctions-on-iran-as-nuclear-talks-stall/  ....

We also know that countries are using Crypto currencies to evade sanctions and also SWIFT transfers that can be monitored and blocked. So this is nothing new.... they just made this public, to make a political statement that these sanctions will not stop them from trading with other countries. 

[NeuroticFish]

Bitcoin is a good option for us (regular people), the governments want to have full control but they can't control anything about bitcoin. That includes the price which is volatile and that makes it a less desirable option for big trades.
But a gov-coin or CBDC is basically the same as fiat, they can control everything about it just like the existing banking system.

OK, it makes sense, however, when entity1 and entity2 make trade, my feeling is that if entity1 sells for entity2 IOUs or CBDCs (which value can be manipulated heavily and even turned to 0) is like giving a loan without proper collateral. Of course, a state will probably pay it (with the note that even national currencies' value is manipulated a little), still, using entity3 or, better, an independent "value" instead of entity2's whatever, makes more sense in my head.

The amount I mentioned above was the total in multiple countries not SK alone ($7 billion in SK), and it is not a "story", there has been a long conflict over this money for the past 4 years and they still haven't given it back simply because US doesn't let them!
This is for example part of this long drama last year:
https://www.forbes.com/sites/dominicdudley/2021/02/24/south-korea-agrees-to-unfreeze-1-billion-in-iranian-assets-following-tanker-seizure-by-tehran/

Complicated story. I don't know if it's SWIFT or the banks, but I've got the point. However, maybe my words were unfortunately chosen. I didn't say the story is false (I didn't know nor care much), my point was that it's shown to the public in order to not say "we want to avoid the problems Russia has with SWIFT" (which can easily happen due to what happens internationally)

[bbc.reporter]

Well, we all know that Iran are still being sanctioned by the US, as we can see from this article a week ago ==> https://www.thenationalnews.com/world/us-news/2022/08/01/us-slaps-fresh-oil-sanctions-on-iran-as-nuclear-talks-stall/  ....

We also know that countries are using Crypto currencies to evade sanctions and also SWIFT transfers that can be monitored and blocked. So this is nothing new.... they just made this public, to make a political statement that these sanctions will not stop them from trading with other countries.  

Also, did Iran not legalize bitcoin mining or their government began mining bitcoin for themselves through taking advantage of partnerships with bitcoin miners because of the cheap electricity offer? I read an article about this but I forgot where it was published. It was an opinion by a contributor where it was speculated that those miners in Iran are really mining for the government. It appears those coins mined were useful for them hehehe.

[cr1776]

Well, we all know that Iran are still being sanctioned by the US, as we can see from this article a week ago ==> https://www.thenationalnews.com/world/us-news/2022/08/01/us-slaps-fresh-oil-sanctions-on-iran-as-nuclear-talks-stall/  ....

We also know that countries are using Crypto currencies to evade sanctions and also SWIFT transfers that can be monitored and blocked. So this is nothing new.... they just made this public, to make a political statement that these sanctions will not stop them from trading with other countries. 

Unless China, Russia and Iran decide to use an alternative to SWIFT, I wouldn't be surprised to see more of them using bitcoin in this fashion.

[bbc.reporter]

@cr1776. Agreed. Also, if those articles and stories about the government of Iran mining bitcoin through their chosen delegates of miners are real, I reckon yes, it would not be very shocking if they choose to use bitcoin instead of an alternative to SWIFT.

[pooya87]

More news has come out about this approving my initial statement about replacing SWIFT.

Yesterday at the end of the Automotive Manufacturing Revolution Expo, the minister of Industry, Mine and Trade talked about "crypto-asset" regulations and he mentions that the new infrastructure is going to provide the alternative option to be used to import goods using bitcoin instead of USD and EUR.
Car imports were the focus of the press conference and the details of the mechanisms they have to follow.

Unless China, Russia and Iran decide to use an alternative to SWIFT, I wouldn't be surprised to see more of them using bitcoin in this fashion.

SWIFT was replaced between Iran and other countries with alternative methods of payment at least 4 years ago. Russia and China are now joining in this year [publicly]. More countries that are members of BRICS or SCO are planning to join in the near future.
Bitcoin will be one of the options not the main replacement.

[NeuroticFish]

I will add these here instead of making new topic, since imho it is part of the same discussion:
Iranian Admin Enforces Regulations on Cryptocurrency Trading
IRAN GREENLIGHTS BITCOIN, CRYPTO PAYMENTS FOR IMPORTS: REPORT

It's the same news, I've added both because the first one has a title that may look negative and it's not.

[...] Fatemi Amin said the comprehensive and detailed law ratified by the administration defines regulations on cryptocurrencies, the supply of fuel and electricity for mining, and the authorization to use cryptocurrencies.

[Fivestar4everMVP]

"By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries," an official from the Ministry of Industry, Mine and Trade said on Twitter.

I'm not even sure whether I should be happy or unhappy about this news, but certainly it's far from unexpected. It's... part of the adoption...

Haha, I feel the same way too, but I think this is a nice progress, this is a few steps forward for bitcoin and cryptocurrencies at large, but this is if they are true to their words, and first, if the news is not fake, government of this days can't be trusted.

By the way, if this is true and by the end of September, we begin to see large trades in cryptocurrencies, then I personally see another legal tender coming, this time, not bitcoin alone, but for cryptocurrencies - top ones.

[bbc.reporter]

@Fivestar4everMVP. We should be very happy. I reckon to witness that bitcoin is being used for the strengths given to it by decentralization is one of the evidences that it works, correct? Why should we criticize how it was used? We do not criticized the companies that create automobiles and cell phones for being used in car bombings.

[pooya87]

then I personally see another legal tender coming, this time, not bitcoin alone, but for cryptocurrencies - top ones.

Highly unlikely specially about altcoins!
There is a key difference between El Salvador and Iran. The former is one of the poorest countries that didn't even have their own legal tender (they use another country's fiat!), Iran on the other hand has its own currency and is among the top 10 biggest economies.

[sergio]

https://www.reuters.com/business/finance/iran-makes-first-import-order-using-cryptocurrency-tasnim-2022-08-09/

According to Reuters (who is citing another agency), Iran has made this its first official import order using cryptocurrency. It's an order that worth $10M. It doesn't tell it was Bitcoin or not though, and the following part makes it even more confusing:

"By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries," an official from the Ministry of Industry, Mine and Trade said on Twitter.

I'm not even sure whether I should be happy or unhappy about this news, but certainly it's far from unexpected. It's... part of the adoption...

Whenever a country moves in the direction of freedom it is a good thing, Bitcoin is financial freedom for everyone.

[PrimeNumber7]

Whenever a country moves in the direction of freedom it is a good thing, Bitcoin is financial freedom for everyone.

I can assure you that the government of Iran has no interest in giving its people any kind of freedom.

The transaction in question was intended to allow Iran to not have to use US and western financial systems. It was to evade sanctions against Iran imposed by the US. I don't think this is good for bitcoin or for crypto, as this shines a negative light.