The President of the United States, Donald Trump, announced the country’s withdrawal from the Iran nuclear deal and the restoring of sanctions on the theocratic regime. In response, Iranians are turning to Bitcoin and cryptocurrency to protect their savings from potential future banking restrictions and currency volatility as sanctions storm in.
Iranians Turn to Bitcoin, Despite Launch of Local Cryptocurrency
Hassan Rouhani, the President of the Islamic Republic of Iran, could be the next state leader experiencing what cryptocurrencies can do for the sake of the people in times of trouble. Venezuela’s Nicolás Maduro has been through that and found it hard to tackle, while setting up the country’s own cryptocurrency, El Petro, at the same time.
The same way digital assets can provide refuge for people in oppressive and unstable regimes, such as Venezuela, sovereign governments may also be able to bypass sanctions enforced by foreign powers, such as the United States. In the case of Venezuela, U.S. President Donald Trump made clear that the purchasing of ‘El Petro’ was prohibited and U.S. Treasury Secretary Steven Mnuchin is authorized to use any necessary regulations to enforce the order.
Trump’s decision to leave the Iran nuclear deal sent shock waves through the country as sanctions could cripple its economy and shrink exports of oil and other goods. In anticipation of that outcome, Iran started developing a local cryptocurrency in 2017, which has been launched earlier in May.
Priscilla Moriuchi, director of strategic threat development at Recorded Future, told Forbes she is skeptical about El Petro’s success among investors and expects the same for Iran’s experimental cryptocurrency.
“The Petro will struggle to be exchangeable for hard currencies such as the dollar or the euro and this will limit its appeal to investors and users. Iran is likely to experience some of the same hurdles if it decides to create its own oil-backed cryptocurrency.”
Iranians, in the meantime, are rushing to Bitcoin in order to protect their savings. Forbes talked to one Iranian living in North America who wished to remain anonymous as his parents try to send him money via Bitcoin.
“With exchange offices closed, sanctions and the rial dropping like crazy it seems like a good idea to use Bitcoin. I know that there are a few people selling and buying Bitcoin in Iran with LocalBitcoins. For now, it seems like Bitcoin is literally the only way to get money out of the country, so I’m sure more people will be inclined to use it, but with the rampant inflation of the Iranian rial a lot of people won’t be able to afford it.”
More than $2.5 billion has fled Iran following the purchase of virtual currencies, according to Mohammad Reza Pourebrahimi, chairman of Iran’s economic commission. The country banned Bitcoin trading in April, but it is still possible to purchase cryptocurrencies if users use services such as mixers to obfuscate the origin and destination of their transactions.