The US House of Representatives – one of two legislative bodies of the US government – has introduced a bill to sanction use by US persons of any cryptocurrency the Iranian government develops. The draft bill also requires a report on Iran’s progress in developing said cryptocurrency within four months.
Sanctions against an Iranian crypto are part of a general increase in sanctions of Iranian entities. The bill – H.R.7321, entitled “Blocking Iran Illicit Finance Act” – names a number of additional Iranian banks to sanction and makes a number of modifications to already existing sanctions.
With respect to an Iranian state-backed cryptocurrency specifically, the bill states that:
All transactions related to, provision of financing for, and other dealings in Iranian digital currency by a United States person or within the United States are prohibited.
The law, should it be passed – which does not seem unlikely given the buildup of sanctions against Iran – described a civil penalty of up to $250,000 of fines; and criminal penalties of up to $1 million and up to 20 years in prison. These penalties are described in U.S. Code § 1705.
Any non-US person found using an Iranian cryptocurrency can also be subsequently sanctioned by the US, and banned from traveling to the US.
The US congress wants to know more about whatever Iran develops, and the bill requires a full report within four months to glean that information. Congress is keen to know if Iran’s government will choose to “fork” an existing blockchain; whether or not the blockchain will be open (decentralized); and whether or not Iran’s central bank will be involved.
Growing Western Sanctions
The draft bill also references previous sanctions against use of the Petro (PTR), Venezuela’s own state-backed, ERC-20-based cryptocurrency, which the Undersecretary of the Treasury for Terrorism and Financial Intelligence identified as attempt by Venezuela to “to try and sidestep our powerful sanctions.”
The US has lately been spearheading economic sanctions against Iran, Venezuela, and Russia. For example, the US recently strong-armed a keystone global financial messaging system, SWIFT, into blocking transactions with Iranian banks.
The universal reaction to sanctions is becoming cryptocurrency, even at the state-level. Following Venezuela’s example, Iran has begun active development of a cryptocurrency which the US now seeks to sanction; and Russia has also expressed interest in developing the capacity.