The Iranian regime's recent acceptance of cryptocurrency payments from ships navigating the Strait of Hormuz is consistent with its existing sanctions-avoiding trade networks, experts in blockchain criminality note. This development follows recent comments from a spokesperson for Iran's Oil, Gas and Petrochemical Products Exporters' Union, confirming that bitcoin is being accepted as a payment method, with a fee of $1 per barrel of oil. The formalization of a system of shipping toll payments using bitcoin and USD-pegged stablecoins appears bold, yet it aligns with the Iranian regime's increasing reliance on cryptocurrency to facilitate cross-border trade, particularly for oil sales, as indicated by data from blockchain analytics specialist Chainalysis.
Andrew Fierman, head of national security intelligence at Chainalysis, finds this trend unsurprising given the growing and complex network using crypto wallets to evade sanctions. Over the last year and a half, there has been notable sanctioned activity involving crypto wallets, including a U.S.-sanctioned IRGC-affiliated financier linked to the Iran-backed Houthi regime, facilitating Iranian oil sales to Yemen through cryptocurrency addresses, amounting to over $178 million in transfers. Furthermore, a broader network of Houthi financiers purchased weapons and commodities from Russia using cryptocurrency addresses, accounting for nearly a billion dollars in activity.
The Houthis have also raised the prospect of imposing a second chokepoint on the world's oil and gas shipping trade at the Bab-al-Mandeb channel. According to Fierman, the IRGC-affiliated networks are using crypto at a commercial scale to facilitate cross-border trade, leveraging a network of cryptocurrency wallets that makes it easier to accept payments in crypto than through traditional banking systems.
The Iranian regime's adoption of cryptocurrency, especially stablecoins, as a payment mechanism for cross-border trade, differs significantly from North Korea's focus on stealing and laundering billions of dollars in crypto. The comprehensive sanctions imposed on Iran since 1979, including individual sanctions on almost every bank, have hindered its ability to access U.S. dollar-pegged assets, making cryptocurrency an attractive alternative for international trade.
Tom Keatinge, founding director of the Centre for Finance and Security at UK defence think tank RUSI, agrees that USD-backed stablecoins have become crucial for the Iranian regime in avoiding sanctions and western banking controls. Lee Reiners, a lecturing fellow at Duke University's Financial Economics Center, suggests that Iran could further its sanctions-skirting goals by demanding payment in specific stablecoins, potentially creating a financial incentive for the lifting of sanctions.