Lawmakers in the United States have presented a bill designed to respond to Iran’s efforts to develop a national cryptocurrency, the latest sanctioned state to turn its focus to crypto. Following in the footsteps of the heavily sanctioned Venezuela, Iran is now reportedly creating its own sovereign cryptocurrency, specifically designed to evade US-led economic sanctions.
Introduced by Republican Mike Gallacher from Wisconsin, the Blocking Iran Illicit Finance Act mandates a report into Iran’s activities around developing cryptocurrency. In the Senate, Senator Ted Cruz of Texas introduced a companion bill, calling for sanctions against anyone knowingly assisting the Iranian effort, including by providing funding, technical support and services.
The bills follow from the U.S. withdrawal from the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal. In a statement published alongside the bill, Gallacher said now was the time to increase the pressure on Iran through tightening sanctions.
He explained, “Withdrawing from the JCPOA was only the first step in ratcheting up pressure on the Iranian regime…We now have an important window to impose maximum economic pressure and degrade the Iranian regime’s ability to export violence across the region. This legislation does exactly that by effectively cutting Iran off from the international financial community.”
Iran has been host to increasing activity around cryptocurrency and blockchain in recent weeks. Low energy prices have made the Islamic republic a destination for crypto mining, while officials from the Iranian government have spoken positively about the potential for blockchain technology.
Now, with a sovereign cryptocurrency under development, it looks as though Iran could find itself in a position to mitigate the effects of sanctions by conducting transactions on a blockchain, rather than through traditional financial systems.
In Venezuela, the controversial socialist government of President Nicolas Maduro created the Petro, a cryptocurrency backed by state oil reserves. Despite opposition from the U.S. and the wider international community, the cryptocurrency has been specifically designed to avoid economic sanctions, with support from allies like Russia.
With Iran now hoping to follow in Venezuela’s footsteps, it remains to be seen whether lawmakers can effectively shut down development efforts.
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