Crypto for foreign trade: What do we know about Iran's new strategy?

Iran has decided to legalize the use of cryptography in cross-border payments, which could impact how some countries collect cryptography.

With the Ministry of Commerce officially approving the use of cryptocurrencies for foreign trade, Iran will become the first such adopter in the world.

The obvious problem with the news is that the country's innovative policy is obviously aimed at circumventing the financial sanctions that have hampered its participation in the global economy for many years.

These circumstances set an ambivalent tone for the Iranian experience – while for some it could prove crypto’s emancipatory ability to evade the all-too-real hegemony of US political will and international financial institutions that enforce it, diehard cryptoskeptics could get the proof they need for their prophecies that decentralized digital assets would be a weapon of choice to disrupt the fragile global order.

Ethical debates aside, it's always curious to know exactly how this strategy will work, what influence it will have on Iran's trading partners, and what challenges it will draw from hostile law enforcement.

The first public announcement of a trading system allowing local businesses to settle cross-border payments using cryptocurrencies in Iran was in January 2022. At the time, Iran's Deputy Minister of Finance Industry, Mining and Commerce, Alireza Peyman-Pak, had spoken of the "new opportunities" for importers and exporters in this type of system, resulting from a joint action of the Central Bank of Iran and the Ministry of Commerce, should provide:

"All economic actors can use these cryptocurrencies. The trader takes ruble, rupee, dollar or euro, which he can use to obtain cryptocurrencies like Bitcoin, which is a form of credit and can pass it on to the seller or the importer. [...] Since the cryptocurrency market is done on credit, our economic actors can easily use it and use it widely."

In August, Peyman-Pak revealed that Iran placed its first import order using crypto. Without any cryptocurrency details...