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The Death of Iran’s President: What It Means for Cryptocurrency and Sanctions Evasion

Ruholamin Haqshanas
Last updated: | 5 min read
The Death of Iran's President: What It Means for Cryptocurrency and Sanctions Evasion

The unexpected death of Iranian President Ebrahim Raisi has sent shockwaves through the geopolitical landscape, raising questions about the future of Iran’s political stability and economic policies.

The country’s economy, which is already grappling with US sanctions, soaring inflation, and high unemployment, could further bear losses if political instability lasts.

While global markets largely remained stable after Raisi’s death, the event could have significant implications for the cryptocurrency industry and Iran’s strategy to evade international sanctions through digital currencies.

Geopolitical Implications After Raisi’s Death


President Raisi’s sudden death has triggered a wave of uncertainty within Iran and across the region.

As one of the most influential figures in Iranian politics, Raisi’s death not only disrupts the nation’s internal political dynamics but also impacts its foreign relations and economic strategies.

This development is poised to influence various sectors, including oil markets, regional security, and the broader geopolitical equilibrium in the Middle East.

In the short-term, the unrest could mean a disruption in oil supplies especially if it evolves into labor action in the oil fields, as happened during the 1979 Iranian Revolution, according to a report from Forbes.

Even if supplies are not immediately affected, major demonstrations and unrest would increase the security premium on oil, given fears that supplies might be affected or that the regime might instigate violence somewhere in the region as a distraction, the report said.

Relevance to the Cryptocurrency Industry


Cryptocurrency has been a crucial tool for Iran to circumvent the stringent economic sanctions imposed by the United States and other countries.

The decentralized and often anonymous nature of digital currencies provides a means for Iran to continue international trade and stabilize its economy despite being cut off from the global financial system.

In 2022, the country completed its first crypto-based order, worth $10 million.

At the time, a report by local semi-official news agency Tasnim said the country plans to widely expand its use of digital currencies and smart contracts in foreign trade going forward.

Iran’s bold crypto move came a month after the US announced a new round of sanctions against the country.

Just last week, the Central Bank of Iran (CBI) unveiled the public pilot launch of the digital rial, the nation’s central bank digital currency (CBDC).

The pilot program is scheduled to debut on June 21, marking the beginning of the Iranian calendar month Tir.

The death of President Raisi raises critical questions about the continuity of these strategies and the future direction of Iran’s economic policies.

Meanwhile, Iran’s potential increased use of cryptocurrency to evade sanctions is likely to prompt a stronger regulatory response from the international community.

Countries like the United States have already expressed concerns about the use of digital currencies for illicit activities, including sanctions evasion and funding terrorism.

Iran’s Reliance on Bitcoin Mining


Iran’s economy has been under severe strain due to longstanding sanctions, primarily targeting its oil exports, financial institutions, and key industries.

These sanctions have led to high inflation, a devalued currency, and significant economic hardships for the Iranian population.

To mitigate these effects, Iran has increasingly turned to cryptocurrency mining and transactions.

The Iranian government officially recognized cryptocurrency mining as a legitimate business activity in 2019 and issued over 1,000 crypto mining licenses to bring capital into the heavily-sanctioned country.

Miners are required to pay a tax on their electricity and sell their mined crypto to Iran’s central bank.

The country has become one of the largest Bitcoin mining hubs, leveraging its subsidized electricity to support the energy-intensive process.

However, it is worth noting that Iran’s global share of Bitcoin mining has fallen as recent power shortages have prompted the government to halt mining operations.

According to the Cambridge Centre for Alternative Finance (CCAF), Iran’s Bitcoin mining currently accounts for 0.2% of the total Bitcoin hash rate, down from as high as 7% in 2021.

At the same time, increasing instances of illegal bitcoin mining in Iran have led to regulatory scrutiny.

Iranian police seized 7,000 mining computers at an illegal cryptocurrency farm in June 2021, Reuters reported.

Reaction of the Crypto Market


The cryptocurrency market has responded to the news of President Raisi’s death with a mix of caution and speculation.

Initial reactions saw a slight dip in prices as investors reacted to the uncertainty and potential implications for the region.

Notably, in times of geopolitical instability, traditional financial markets often exhibit volatility and uncertainty.

Amidst such turmoil, investors seek refuge in assets perceived as safe havens.

Historically, gold has held this status, but in recent years, Bitcoin has emerged as a modern alternative.

As a decentralized digital currency, Bitcoin offers unique attributes that make it an appealing option during periods of geopolitical tension.

One of Bitcoin’s primary appeals as a safe haven is its decentralized nature. Unlike traditional currencies, which are subject to government control and influence, Bitcoin operates on a peer-to-peer network without a central authority.

Bitcoin’s finite supply is another factor contributing to its status as a safe haven. There will only ever be 21 million Bitcoins in existence, making it a deflationary asset.

Russia Follows Iran in Crypto Policy


Iran is not the only country using cryptocurrency to mitigate the impact of sanctions.

Russia, facing its own set of international sanctions, has also explored digital currencies as an alternative financial system.

Both countries have utilized their technological capabilities to engage in cryptocurrency mining and transactions, albeit with varying degrees of success and international response.

More recently, it was revealed that Iran and Russia are working on CBDC and “digital financial asset” (DFA)-powered trade solutions.

During an interview earlier this month, Rahimi Mohsen, the trade attaché of the Iranian Embassy in Russia, said that “nations” were “exploring the use of DFAs and central bank digital currencies.”

Mohsen stated that CBDCs, including the digital ruble and Iran’s project, the so-called crypto-rial, could “potentially mitigate the impact of sanctions.”

Russian banks and other firms have begun issuing DFAs: blockchain-powered securities, commodities, and more; as they look to increase domestic investment options.

Earlier this year, President Vladimir Putin signed a law that allows Russian firms to engage in cross-border DFA trade using Russian-issued tokens.

Russian lawmakers have also floated the idea of doing business with China using the digital ruble and the Beijing-backed digital yuan.

The Bottom Line


The unexpected death of Raisi has raised concerns about Iran’s political stability, impact on the country’s economic policies, and implications for the cryptocurrency industry.

Iran has been a key player in the crypto space, with reports claiming that the country has been using digital assets to evade international sanctions.

The country has also been historically involved in Bitcoin mining. However, recent challenges such as power shortages and regulatory crackdowns have significantly reduced its global share of Bitcoin mining activities.