Amid stalled negotiations to reopen the Strait of Hormuz, Iran has increasingly turned to Bitcoin (BTC) to evade the United States’ sanctions.
On May 18, Iran unveiled a Bitcoin-backed insurance service dubbed ‘Hormuz Safe’, according to documents from the country’s Ministry of Economy and Financial Affairs. The Hormuz Safe is meant for Iranian shipping companies and cargo owners seeking fast, verifiable digital insurance.
Already, Iran’s head of parliamentary commission for national security, Ebrahim Azizi, had hinted at a potential mechanism to manage traffic in the Strait of Hormuz. Earlier on Monday, the Persian Gulf Strait Authority (PGSA) was unveiled as the legal entity and representative authority of the Islamic Republic of Iran for managing the passage and transit through the Strait of Hormuz.
“In this process, only commercial vessels and parties cooperating with Iran will benefit from it. The necessary fees will be collected for the specialized services provided under this mechanism,” Azizi stated.
Iran leans towards Bitcoin to evade U.S. sanctions
The move to adopt Bitcoin as a means of payment at the Strait of Hormuz follows last month’s freezing of Iran’s USDT. Notably, Tether, alongside the Office of Foreign Assets Control (OFAC) and law enforcement agencies, froze more than $344 million in USDT, which was linked to Iran’s central bank, based on data from Arkham Intelligence.
The ability of shipping entities to pay fees in Bitcoin to Iran undermines United States sanctions. Moreover, the Bitcoin network is permissionless, globally accepted due to its deep liquidity, and free from control by any global central bank.
As such, Iran could become a major Bitcoin hub, since the Strait of Hormuz accounts for about 20% of global petroleum consumption. With each ship estimated to pay around $2 million to the Iranian government for passage rights, the demand for BTC through the Hormuz Save could catalyze a supply shock amid rising global adoption.
