Back in May, the Iranian government restricted access to all crypto exchanges in a move that surprised the world. Fast forward to July and it looks like a move towards crypto acceptance could be the only hope for Iran and its government. Fresh sanctions imposed by the US have severely damaged the country’s economy, leaving its cash reserves rather dry. In a bid to fix the problem temporarily, the Iranian government tried to withdraw $350 million from German banks – money that is rightly Iranian. However, the US government has objected and are pleading with the German government to deny the request. In a shock move, Iran looks like it might convert its overseas cash reserves to Bitcoin to circumvent the US sanctions.
Why Can’t Iran Withdraw Money?
Iran is facing the same issue that many people have with the current financial system. Fiat stored in a bank no longer belongs to the owner, and the bank reserves the right to decline a withdrawal. The US government don’t want Iran to have their money, as it will mean their sanctions are no longer being felt, and this won’t encourage Iran to reduce their nuclear program. If Iran gets their cash reserves, it will be able to thrive – which will anger the US even further and means it will impose even tighter restrictions on the country.
A Familiar Sounding Story
The US did something similar to Venezuela a few years back. It stopped buying Venezuelan oil and told all of its allies to stop buying too. This eventually caused the Venezuelan economy to crash and enter realms of hyperinflation. With the Bolivar worth next to nothing, locals turned to crypto as a safe haven and the government even created their own “oil pegged” cryptocurrency – the Petro. This was designed to help the Venezuelan government get around America’s tight restrictions, however other countries simply aren’t interested in the Petro.
Bitcoin to the Rescue
The great thing about Bitcoin is that nobody can take your money away from you or stop you exchanging it. It is totally decentralized and governments can’t interfere. It is providing a lifeline to the Venezuelans, Nigerians, and now to the Iranians. While Nigeria is turning to Bitcoin for a slightly different reason, it seems to be the only way to protect the locals from hyperinflation. If Iran can change its $350 million into Bitcoin, it will essentially become solvent again and will have no problems bypassing the tight US sanctions.
The only issue the Iranian government could encounter would be finding an exchange to change the fiat into crypto. Due to the fact that all fiat exchanges are centralized – they have KYC (Know Your Customer) checks in place – and an account to change the Iranian money to crypto will probably get declined. Vitalik Buterin slammed centralized exchanges earlier this week. Buterin who created Ethereum said he hope they “burn in hell as much as possible.”
One Country at a Time
Bitcoin’s borderless and apolitical nature makes it a desirable currency in times of fiat hardship, trade wars, and recession. If Iran manages to get its hands on Bitcoin, it could redefine how governments go about imposing sanctions. Changing how economies deal with recessions and devalued fiat currencies in the process. This is just another prime example of why Bitcoin is the future, as it’s global impact could potentially change the way the world functions.