Iran looks to BRICS countries to use cryptos to help it bypass sanctions, Pg 13

Key Highlights:

• Iran seeks to use cryptocurrencies to pay for trade with BRICS nations to circumvent U.S.–UN sanctions.
• Sanctions have severely restricted Iran’s access to the SWIFT system, hurting its trade and financial flows.
• Iran hosted the deBlock Summit, signalling readiness to integrate blockchain into trade systems.
• BRICS sees crypto as a tool for de-dollarisation, reducing dependence on the U.S. dollar.
• Iran’s domestic crypto environment remains poorly regulated, with inconsistent rules on trading, conversion, and mining.
• Iranian Parliament leaders question the ban on cryptocurrencies amid calls for more transparent regulation.
• Experts argue blockchain could provide sanctions-resilient contracts and improve financial trust.

Detailed Insights:

• Sanctions and financial isolation:
  • Since 1979, the U.S. has expanded layers of sanctions targeting Iran’s banking and oil sectors.
  • Major sanctions block Iran from accessing global payment systems like SWIFT, limiting settlement of international trade.
  • August 2025: France, UK, and Germany re-imposed sanctions under a ‘snapback mechanism’ over Iran’s enrichment activities.
• Why crypto appeals to Iran:
  • Cryptocurrencies operate outside state-controlled banking systems, allowing peer-to-peer transactions immune to sanctions-based monitoring.
  • Crypto and blockchain offer an alternative to dollar-dominated trade, aligning with BRICS’ push for financial multipolarity.
  • Speaker Mohammad Baqer Ghalibaf emphasised crypto as a “necessity” for Iran to trade under sanctions.
• De-dollarisation and BRICS vision:
  • BRICS aims to reduce the dominance of the dollar and promote local-currency or blockchain-based settlement.
  • Proposals include a BRICS cryptocurrency or settlement token to facilitate trade.
• Domestic bottlenecks inside Iran:
  • Iranian regulators have blocked crypto–Rial conversion gateways, restricted exchanges, and allowed mining but raised concerns over energy consumption.
  • Private-sector participants at the summit argued that:
  • Regulatory framework for blockchain is unclear and inconsistent.
  • Lack of transparency discourages investment.
  • Iran needs strong trust-building measures, such as smart contracts and clearer legal norms.
• Policy dilemmas:
  • Lawmakers question how much the public should pay in electricity costs for high-energy crypto mining.
  • Policymakers are divided between using crypto to bypass sanctions and concerns over money laundering and financial risk.

Scientific/Technical Concepts Involved:

• Cryptocurrency: Decentralised digital asset using blockchain; enables cross-border transfers outside traditional banking channels.
• Blockchain: Distributed ledger technology ensuring secure, transparent, tamper-evident transactions.
• SWIFT: Global messaging network enabling secure cross-border payments; sanctions often target access to SWIFT.
• Snapback Mechanism: Provision that reinstates prior sanctions automatically if a country violates nuclear or other agreements.
• Crypto Mining: Energy-intensive process validating transactions and generating new cryptocurrency units.