Here’s the good news about Iran and cryptocurrencies like Bitcoin and Ether: they make payment transactions with Iran easier at a time when US banks can’t do business in the country and big European banks won’t. That’s the view of Dr. Amir-Said Ghassabeh, attorney and principal associate of global transactions at Freshfields Bruckhaus Deringer LLP. He expects to see more, mostly small European and Asian companies with an appetite for risk taking advantage.
“Virtual currencies are being increasingly adopted as a payment mechanism in dealings with Iran,” Dr. Ghassabeh wrote recently. In an interview with iTreasurer, he said using cryptocurrencies allows speedy international payments at relatively low costs because they allow the parties to avoid banks. “In my view, good reasons for globally-acting companies to use them,” he said.
One day that may include US multinationals (MNCs); but that day has not arrived. Despite the lifting of sanctions on Iran nearly two years ago as part of a multi-country nuclear deal, US citizens and companies are still prohibited from doing business with Iran in any currency, with some exceptions for food, medicine and aircraft.
The only clear positive spot for most US MNCs from the nuclear deal came in the form of something called General License H, issued by the Office of Foreign Assets Control (OFAC). It allowed the non-US subsidiaries of US MNCs to conduct certain business with Iran.
Linda Weinberg, an attorney with Barnes & Thornburg specializing in US regulation of international trade, says while a sizable number of US MNCs have taken advantage of General License H, it doesn’t work for those with business structures where the US parent would be facilitating transactions of foreign subs with Iran. “The foreign sub has to do the transaction by itself,” she explains.
Now there’s another worry for companies taking advantage of General License H: President Trump may pull the US out of the nuclear deal. “General License H would go away,” Ms. Weinberg says. “Everyone’s keeping their eye on it.” Her advice to companies: “I think they should have a Plan B, a plan to wind down.” She says if there is a change, companies would likely have 180 days to comply.
Senator Bob Corker (R-Tenn.) recently told CBS he expects the president to pull out of the deal when it comes up for certification in May unless the White House and European allies reach an accord, which he considers unlikely.
The Trump administration’s negative view of Iran is one reason Dr. Ghassabeh doesn’t expect any foreign subsidiary of a US MNC to use cybercurrencies to do business in Iran, even if the US remains part of the nuclear deal.
“I don’t think that there will be a lot of use of cryptocurrencies in relation to Iran transactions given that the US administration has an eye on those transactions…and they are currently considering the use of regulations to prohibit the use of cryptocurrencies in such transactions,” he said.
President Trump this week signed an executive order banning US companies and individuals from doing transactions using Venezuela’s new, so-called petro cryptocurrency. And that news came about a month after Iran confirmed it is developing its own cryptocurrency, a move analysts said is motivated by the desire to get around US sanctions.