Iran will be allowing residents and local merchants to pay by cryptocurrency.

The Iranian Central Bank, the Ministry of Industry, and Mine and Trade have taken the decision to authorize the use of cryptocurrency to facilitate trade transactions in Iran. The approval came after a meeting between the bank and the ministry. 

The new decision will provide a door for businesses to curb hawkish sanctions which have been placed on the country, easing the weight of the international monetary and trade system which have put the Iranian economy at risk. Merchants and businesspeople will be able to carry out trade settlements and transactions without having to worry about the sanctions. 

Cryptocurrency undermines US sanctions

The US Department of Treasury released a sanctions review report in October 2021 explaining the effectiveness and implications of US sanctions with recommendations for the future. 

The report focused on the idea that the use of crypto-assets and trade will undermine the effectiveness of the sanctions, and that if cryptocurrency continues the way it's running now, there will be less dependency on the US dollar and US financial institutions and systems in the future. The US dollar, according to the International Monetary Fund, makes up over 60% of all central bank foreign exchange reserves and around 90% of all forex trades. In addition, almost 40% of world debt is in US dollars. 

The report said, “Technological innovations such as digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions."