Iran places first import order worth $10 million using cryptocurrency

Iran made its first import order to be paid in crypto since the government, strapped for foreign exchange due to sanctions, amended digital assets legislation to allow locally mined cryptocurrencies to be used for purchases.

The order is valued at $10 million, according to a Reuters report citing Tasnim Agency, a private news agency in Iran. This is the first step towards allowing the country to trade through digital assets that bypass the dollar-dominated global financial system and to trade with other countries facing similar US sanctions, such as Russia. The report didn’t specify which cryptocurrency was used in the transaction.

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The move can enable the Islamic Republic to limit the impact of US sanctions that have crippled the economy.

“This week, the first official import order was successfully placed with cryptocurrency worth 10 million dollars. By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries,” an official at the Ministry of Industry, Mine and Trade, Alireza Peyman-Pak said (in Persian) on Twitter.

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The development comes after the Iranian government amended rules on the use of cryptocurrencies in the country. On June 1, the Central Bank of Iran (CBI) proposed an amendment to enable the nation’s cabinet to fund imports through digital currencies. The government or the central bank sources the crypto funds from local miners. Some miners in Iran are offered subsidized energy to operate but sell their coins to the CBI only.

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In 2019, the government of Iran legalized crypto mining in the country. However, it still strictly regulates the industry and cracked down on all local miners over energy use last year. The government plans to fully leverage digital currencies to facilitate foreign trade in the future.

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The United States has imposed a total economic embargo on Iran, including a ban on all oil, banking, and shipping imports.

According to a report by Elliptic released in 2021, 4.5% of all bitcoin mining was taking place in Iran, partly due to cheap electricity. Cryptocurrency mining could help Iran earn hundreds of millions from imports and lessen the impact of sanctions.

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On August 9, the European Union (EU) said it presented a final text to revive the 2015 Iran nuclear deal as four days of indirect talks between US and Iranian officials wrapped up in Vienna.

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Under the 2015 agreement, Iran curtailed its nuclear program in exchange for relief from western sanctions. In 2018, former US President Donald Trump reneged on the nuclear deal and restored harsh US sanctions, leading Tehran to begin violating the agreement’s nuclear limits.