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In January, US President Donald Trump called for tougher economic sanctions against Iran amid a worsening conflict between the two countries. Pressure from America has been affecting the economy of former Persia for over 40 years, starting with the Islamic Revolution in 1979. But it seems that in 2020, the Iranians found a way to reduce the impact of many restrictions. In late January, journalists from the Arab international publication Asharq Al-Awsat told the world about Iran’s new bitcoin strategy, whose main goal is to circumvent international sanctions. At the same time, not only Iran, but also a number of other states are interested in the opportunity to deal with economic restrictions using digital money. Why do cryptocurrencies see salvation from sanctions? What role will CBDC play in this? And how do regulators imposing economic sanctions respond to the new movement? submitted by affilcoin to u/affilcoin [link] [comments] https://preview.redd.it/2m36sp6cpvf41.jpg?width=1480&format=pjpg&auto=webp&s=afb1b82de1514cda1ebc7acfcbb5c34f0b3d93d7 Iran and US exampleSanctions imposed on countries may differ in terms of severity and scope, but they are united by one thing — they negatively affect the local economy to a greater or lesser extent. Therefore, it is quite reasonable that many would like to get rid of them. Moreover, some countries, such as Iran, experience them very painfully. According to Asharq Al-Awsat reporters, only in the last two years, under the influence of US sanctions, the Iranian economy has dipped by 10–20%.The example of Iran today is not just the most relevant. It also perfectly illustrates the severity of the sanctions and how cryptocurrencies help get around them. Under US restrictions, no American companies (including banks) are allowed to do business with Iranian partners. This actually cuts off Iran’s trade force, because the country is losing the ability to enter into profitable agreements with many of the world’s largest corporations. This situation is especially critical given how much Iran could earn from the US oil trade (just take a look at the UAE). The second most important economic burden weighing on the shoulders of the Iranians is the ban on the use of dollars and disconnection from the international SWIFT system. For domestic transactions, such a restriction is useless and hits the state in about the same way as against a wall of peas. However, it seriously complicates foreign trade, because any Iranian international company is forced to rely on alternative currencies. This applies to absolutely all transactions with foreign companies, the vast majority of which use the dollar when conducting international business. Only a small part relies on the euro and even more so it is unlikely that any of the large companies will want to conduct transactions using the weak and unstable Iranian rial. Naturally, pressure on Iran’s foreign policy negatively affects its internal state. In such a situation, bitcoin for the country becomes a kind of messiah, because it can be used to circumvent legal barriers and conduct international trade outside the traditional banking system. A good example: using bitcoin, you can conclude deals with foreign companies, including American ones (behind the scenes), and sell them the same oil. Bitcoin is used not only by governments, but also ordinary citizens. Cryptocurrency for them is almost the only opportunity to send a transfer abroad and save money with high inflation and devaluation of the national currency. At the same time, the Iranians consider Bitcoin not only as a payment instrument, but also as a source of income. We are talking about banal mining, which unfolded on a large scale amid cheap Iranian electricity and the constant devaluation of the rial. Asharq Al-Awsat cites 2019 data: • Last year, 1,650 Iranians using bitcoin were interviewed. • It turned out that 25% of them earn on cryptocurrencies from $ 500 to $ 3000 per month, including mining.Initially, the idea of mining was not particularly liked by the government, which prefers to punish the locals for the abuse of cheap electricity. However, in August 2019, mining in the country was recognized as a legal sector of the economy. Since then, regulators have issued more than a thousand licenses for the legal mining of bitcoins to local entrepreneurs. At the same time, today, the Iranian authorities themselves produce cryptocurrency and use the received coins to finance the state and carry out trade transactions in circumvention of sanctions. Cryptocurrencies as a salvation from sanctionsIran’s example is far from the only one when it comes to the use of digital money with the goal of circumventing sanctions in one way or another. For instance:• At the end of 2018, the Venezuelan government launched its own digital coin, Petro. Technically, this is just another ERC20 token based on Ethereum. But in practice it is a tool for concluding international transactions bypassing sanctions imposed by the American government. When launching the national cryptocurrency, President Nicolas Maduro bluntly stated that Petro would help the country “break the financial blockade.” It cannot be said that the Venezuelan initiative has succeeded at the international level, however, the very idea is a “wake-up call” for world sanctions. • In November 2019, the BRICS countries (Brazil, Russia, India, China, South Africa) expressed interest in creating a single cryptocurrency for trade settlements between the members of the union. This is a certain analogue of SWIFT, the main purpose of which is to protect itself from sanctions in order to avoid situations, as in Iran. A similar question is especially acute for China, which is waging a trade war with the United States and runs the risk of running into serious economic measures on the part of Washington, as well as for Russia, which is under growing pressure from world regulators. • Two months ago, US law enforcement authorities arrested Ethereum developer Virgil Griffith for aiding the DPRK authorities in circumventing sanctions. The FBI claims that Griffith attended a local blockchain conference and talked about options for using cryptocurrencies for illegal international payments. First and foremost, US authorities fear that North Koreans will use knowledge to fund a nuclear weapons program. • A few days ago, the popular Blockchain.com crypto wallet (formerly Blockchain.info) added the ability to quickly convert the Turkish lira to BTC and vice versa. Turks are interested in diversifying their savings, since the national currency is experiencing serious problems and today it is estimated at only 20% of its value in 2008. In many ways, for its problems, the lyre should “thank” the American sanctions imposed on Turkey for its role in the situation with Syria. And even if they were canceled in October, the US Senate in December called on Trump to apply new economic restrictions in response to the fact that Turkey is a member of NATO and does not shy away from purchases of Russian defense systems. Amid these problems, foreign banks are gradually ceasing their activities in the country, exacerbating the unenviable position of the Turks. Meanwhile, already a quarter of citizens are actively using bitcoins and are thus protected from the consequences of sanctions. In an attempt to save the economy, the Turkish government is seriously considering the use of national digital currencies.It is interesting that with the help of cryptocurrencies it is possible to bypass not only international, but also internal corporate sanctions in almost any country in the world. We are talking about the most common state prohibitions on any product or service. The fact is that in almost all countries of the world such restrictions imply a legal backdoor for ordinary citizens, because the criminal liability applies only to service providers, but not to consumers. Let us illustrate with the example of Norway. The government has officially banned the gambling sector. Under the law, almost everything that remotely resembles gambling rates is prohibited. Nevertheless, the growing number of new online casinos suggests that the ban does not work. Why is that? Because local gaming platforms are managed anonymously, use advanced security measures and implement a cryptocurrency payment system. As a result, the authorities, purely technically unable to track the owners and close illegal sites. But most importantly, the Norwegians are calmly betting on digital money, without fear of the wrath of regulators and any legal consequences. Just because the law says that the consumer is not to blame. Is this good or badAll of the above looms in a rather controversial picture:• On the one hand, crypto enthusiasts around the world should be proud that the blockchain technology has turned out to be so powerful and effective that entire countries consider cryptocurrencies as a way to repulse sanctions. In this way, states can gain long-awaited freedom and pursue the policy that they consider necessary. • On the other hand, sanctions are imposed for a reason. For some countries, this is salvation, but for others, problems. In today’s economy and politics, sanctions play an important role. In this aspect, the States see cryptocurrencies as a threat to national security, so every year they tighten the screws on crypto projects more tightly and tighten the noose around the neck of the cryptocurrency exchange.Forbes blockchain expert Jason Brett, a former representative of the American Federal Deposit Insurance Corporation (FDIC), believes that the American authorities are confused and urgently need help from the crypto industry. Talented blockchain specialists could help develop economic sanctions that are effective in the world of cryptocurrencies. But until then, the expert believes, the policy of Americans regarding digital money will remain quite aggressive, and in their attempts to curb technology they will restrain its growth. |
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