- Digital currencies may threaten the ability of the U.S. to enforce sanctions
- Iran and Russia to create a digital currency that will help them evade the sanctions
- European nations to collaborate with Russia and China to develop a payments system that will sidestep U.S. sanctions on Iran
The attempt by “rogue” nations to evade U.S.-led sanctions using cryptocurrencies has been met with more sanctions for fear of its dangerous potential. However, it may appear like the biggest challenge is not the crypto technology but from what is perceived to be an escalating attempt to defeat U.S. Dominated international payment systems.
There’s More than Meets the Eye
A recent article published in Forbes Magazine by former CIA analyst Yaya Fanuise who serves as the Director of Analysis at the Center on Sanctions and Illicit Finance at the Foundation for Defense of Democracies, promotes the idea that the real reason behind the new wave of sanctions is the perceived threat of the technology behind digital currencies on the ability of the United States to enforce sanctions in future.
The United States has reacted sharply to an attempt by Nicolas Maduro’s government’s attempt to create an oil-backed national cryptocurrency the Petro. The White House has issued an executive order that was followed by the congress considering a bill classifying the order. The US Treasury has also recently given guidance underscoring the sanctions obligations of cryptocurrency intermediaries regarding sanctions to Iran.
Iran, a country that is facing the return of US-led sanctions has had its parliamentarians talk about the possibility of a collaboration between Iran and Russia to create a digital currency that will help them evade the sanctions. The idea was touted by MP Mohammad-Reza Pourebrahimi who was attending a meeting in Moscow with Dmitry Mezentsev, the Chair of the Federation Council Committee on Economic Policy. The Iranian legislator said:
“Digital currencies could provide a way for both Iran and Russia to avoid U.S. dollar transactions, as well as a possible replacement of the SWIFT interbank payment system.”
The real threat, according to Fanusie, is not the blockchain technology, but the ability by countries that are perceived to be adversaries of the United States finding an alternative system, thereby curtailing the U.S.’s ability to enforce sanctions. Using cryptocurrencies to evade sanctions is also seen as a desire by those “rogue” nations as a desire to end the U.S’s dominance of international payment systems.
European nations like France, Germany, and the UK plan to collaborate with Russia and China to develop a payments system that will sidestep U.S. sanctions on Iran. Should the nations choose a SWIFT-like international system, there is fear that a permissioned blockchain consortium of dissenting states could be a bigger threat and not an open cryptocurrency network similar to Bitcoin.