This past February, Valiollah Seif, governor of the central bank of Iran, told press on national television that Iran would eliminate the use of the U.S. dollar within the country. As the middle eastern country’s economic situation shifts, the region is steadily becoming fertile ground for bitcoin adoption.
Bitcoin’s Censorship Resistance History of Bypassing Economic Sanctions in Iran
Over the past few years, people have stated they believe Iran is the perfect candidate for embracing bitcoin’s censorship resistant utility. The logic behind this is largely due to the U.S. sanctions against Iran, which strictly enforces economic embargos and trading bans against the country. Many other countries also follow the sanctions as the U.S. and the United Nations Security Council has put a lot of pressure on allies to support the trade guidelines.
Because of the strict economic sanctions the subject of bitcoin and Iran made headlines in 2012 from a report published by Bloomberg. The article explained that “dollar-less Iranians had discovered the virtual currency.” Bitcoin’s were becoming quite valuable in Iran because they could be easily spent abroad by citizens the report detailed. Iranian-American bitcoin consultant Farzad Hashemi said residents were amazed at how easily it could help them spend money overseas.
“They are instantly fascinated by it,” Hashemi explained. “It’s a flash for them when they realize how it can solve their problems.”
The Iranian Bitcoin Environment
Bitcoin’s legality in Iran is unclear as the country’s authorities have not officially established a political stance on the decentralized currency subject. Citizens currently rely on Localbitcoins for their bitcoins and also utilize a marketplace called Coinava. The peer-to-peer marketplace has been offering Iranians a platform to buy and sell bitcoins since 2013. Coinava is similar to Craigslist as users can meet to trade bitcoins in their local area. The Iranian bitcoin platform uses an escrow to hold traded funds and charges both parties 1% for the transaction.
Also, Bitcoin Iran’s public Facebook group has over 31,000 members, and there are very active Iranian bitcoin meetups as well in the country. Moreover, a shoe company in Iran called Persian Leather Shoes is a bitcoin only business. The Persian shoe company explains why it only uses bitcoin for shoe sales on its website stating;
Our business is making and selling leather products. We like to sell our products across the world and the more customers the better. The problem is we operate in Iran and most payment systems either are not willing to serve us at all or impose a huge risk on our business — Now, with Bitcoin and the help of Bitcoin community we are hoping to become a role model for other small businesses in Iran to find global customers.
Using Bitcoin for Iranian equities on the Tehran Stock Exchange
Last week, according to a local Iranian news outlet, a Swedish firm called Brave New World Investments plans to use cryptocurrencies as a way to bypass trading sanctions in Iran. The startup aims to fund its operations with bitcoin as an investment vehicle for Iranian equities on the Tehran Stock Exchange (TSE).
The Linköping, Sweden-based Brave New World Investments (BNW) says it started its business because Swedish banks “fear” doing business with Iranian financial institutions. The firm’s founder Mikael Johansson details the startup will operate entirely with cryptocurrency with their partners and European shareholders.
“Now we simply do not have a Swedish bank account. However, we soon will have an Iranian bank account for the equity investments. We pay our bills, shareholder dividends, Iran deposits – everything – in cryptocurrencies,” explains Johansson. “There are no sanctions in Sweden or in the European Union obstructing Swedish-Iranian investments, so we are not breaking any laws in our jurisdiction.”
Bitcoin.com spoke with Johansson and asked him if he thinks problems may arise concerning the U.S. sanctions.
“I think every operation where you do not know your bitcoin counterparty well, you might run into problems with sanctions,” Johansson told Bitcoin.com. “We will perform an audit on our process to ensure that no sanctions are accidentally broken.”
The benefits of bitcoin’s censorship resistance is working well for citizens of Iran and those wanting to do business in the middle eastern country. With the central bank removing the U.S. dollar away from the region residents may find the attributes of bitcoin more tempting.
What do you think about bitcoin adoption in Iran? Let us know in the comments below.
Images courtesy of Shutterstock, Brave New World, Coinava, and the Bitcoin Iran Facebook page.