How Iran is cashing in on cryptocurrencies to evade US sanctions

Special How Iran is cashing in on cryptocurrencies to evade US sanctions
Iranian transactions were in such well-known cryptocurrencies as Bitcoin, Ether, Tether and XRP, and a smaller token, Litecoin, according to Reuters (Shutterstock)
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Updated 15 November 2022

How Iran is cashing in on cryptocurrencies to evade US sanctions

How Iran is cashing in on cryptocurrencies to evade US sanctions
  • Experts see processing of Iranian transactions as indicator of possible money laundering and sanctions evasion by the regime

IRBIL, IRAQI KURDISTAN: Until the spectacular collapse last week of the digital-asset exchange FTX, what was making headlines was Iran’s use of cryptocurrencies to overcome the disadvantages of being cut off from the global financial system.

Earlier this month, Reuters news agency reported that the leading crypto exchange Binance had processed $7.8 billion worth of Iranian crypto transactions since 2018 despite extensive US financial sanctions against Tehran.

The report, citing a review of data from leading US blockchain researcher Chainalysis, said almost all the funds passed between Binance and Iran’s largest crypto exchange, Nobitex, which offers guidance on its website on how to skirt sanctions.

The Reuters report said that in addition to the Tron token, the Iranian transactions were in such well-known cryptocurrencies as Bitcoin, Ether, Tether and XRP, and a smaller token, Litecoin.

The revelations came as no surprise to Ali Plucinski, a cybersecurity analyst for the risk intelligence company RANE. “Iran has increasingly utilized cryptocurrencies, and crypto mining, in recent years to evade US-imposed sanctions on its economy and to bolster domestic revenue with some success,” she told Arab News.

“Iran possesses significant natural resources, especially natural energy resources, and in response to strong US sanctions on its oil and gas sector, Iran has instead diverted some of these resources to the production of electricity to fuel crypto-mining and the accrual of cryptocurrencies.”

Mining crypto requires powerful computers capable of solving complex numerical puzzles. The miner is rewarded with a certain amount of crypto for solving puzzles. Bitcoin mining uses a notoriously large amount of electricity. Illegal crypto-mining caused 10 percent of electricity outages in Iran in the winter of 2021 and 20 percent in the summer of the same year, according to Iran’s state electricity company.

“After four decades of assorted sanctions, the Iranian government has perfected a variety of techniques for evading sanctions, and crypto is certainly one of its tools,” Barbara Slavin, the director of the Future of Iran Initiative and a non-resident senior fellow at the Atlantic Council, told Arab News.

“I would bet that the Islamic Revolutionary Guard Corps is behind these ‘illegal’ mining efforts,” she said. “I think this is more a regime phenomenon than something used by ordinary people who tend to stockpile dollars or consumer goods as a hedge against inflation.”

Plucinski pointed out that it is illegal “to buy, sell or invest in cryptocurrency in Iran, and crypto payments within the country are similarly illegal.”

“Citizens can engage in crypto-mining practices that the Iranian government permits,” she said. “Crypto-mining for personal gain is prohibited and Iranian police have regularly engaged in crackdowns on illicit mining operations throughout the country.”

Iranians can use cryptocurrencies to circumvent restrictions on online shopping, according to one expert (Shutterstock)

The Iranian regime officially recognized crypto-mining in 2019. Miners were required to identify and register themselves, pay an electricity tariff, and sell their mined bitcoin to Iran's central bank.

“Iran’s shift to cryptocurrencies has proven to be quite effective for the regime in evading US sanctions, evidenced by the recent article of Reuters,” Plucinski said.

Furthermore, mining has proven profitable for Iran. In its 2022 cybercrime report, Chainalysis estimates that Iranians mined $186 million worth of Bitcoin between 2015-21, most of it in the past year.

An estimated 4.5 percent of all worldwide Bitcoin mining has taken place in Iran, according to a 2021 report by the blockchain analytics firm Elliptic. That report also valued Iran’s annual Bitcoin mining revenue at approximately $1 billion at the country’s level of mining at the time.

“As these reports indicate, Iran has had significant success in finding alternate ways to bolster its economy through cryptocurrency production in spite of strong international sanctions,” Plucinski said.

“The Iranian government approved the use of crypto funds to pay for imports in August 2022, thereby enabling the regime to circumvent extensive US sanctions imposed on Iran’s finance and banking sector.”

That month, Iran placed its first international order using $10 million worth of cryptocurrency. However, the government official who disclosed that order did not specify which cryptocurrency Iran used to pay for the goods.

This handout picture provided by the office of Iran's Supreme Leader Ayatollah Ali Khamenei on January 9, 2020 shows Khamenei (R) greeting newly-appointed commander of the Quds Force of the Islamic Revolutionary Guard Corps Esmail Qaani (L).  (AFP)

“The Iranian government has announced its intention to bolster foreign trade with specific countries through the use of cryptocurrencies and smart contracts,” Plucinski said.

“Moving forward, Iran will likely continue to invest in its cryptocurrency utilization and crypto mining activities to bolster foreign trade initiatives.”

Nevertheless, significant constraints Tehran faces include the large amounts of electricity required for mining and the notoriously volatile valuation of cryptocurrencies, which can make digital currency unreliable.

“Overall, however, cryptocurrency generation will continue to be a favorable alternative for Iran to capitalize on its significant natural resources to boost government assets and to enable foreign trade while circumventing Western sanctions,” Plucinski said.

According to Arash Azizi, author of “The Shadow Commander: Soleimani, the US, and Iran's Global Ambitions” and a Ph.D. candidate in history at New York University, cryptocurrencies are used in various ways in Iran “not just by the state and many parastatal bodies but by private citizens and companies” since they are “a useful way for evading sanctions for all sides.”

“For instance, Iranian citizens with addresses in Iran are barred from many forms of financial transactions (something as simple as buying a product on many online shops), and crypto allows them to circumvent that ban,” Azizi told Arab News. “It is also a good investment opportunity given the fragility of the rial and dearth of many traditional investment opportunities.”

He added: “Seeing an obvious benefit in the possible use of cryptocurrencies, the Iranian regime has invested resources and has tried to study its feasibility. But it has yet to become a main, or even a primary, mode of transfer.”

An Iranian man looks looks at currency exchange rates outside a shop in downtown Tehran on June 15, 2021. Iran holds a presidential election on June 18, with ultraconservative Ebrahim Raisi, who heads the judiciary, most likely to win from the seven candidates. (AFP)

Tehran has also considered using crypto “for its relations with militias in the region and in certain relations with Russia.”

However, it has encountered problems in doing so. “The regime has found out, for instance, that the trade in cryptocurrencies is not as lawless as some have imagined, and there are significant hurdles,” Azizi said.

“Iran doesn’t only face nuclear-related sanctions but is on the black list of FATF (Financial Action Task Force), and there is thus a lot of sensitivity around any activity that can be traced back to the country.

"As a result, it appears that ‘cash in the suitcase’ and similar methods are still the primary mode of moving money around for the regime when it comes to funding regional militias.”

Furthermore, he said, “as the relationship with Russia deepens, given the country’s well-known talents in the technology field, the regime will attempt to use more sophisticated means of illicit financial transfer.”

For her part, Plucinski outlined how cryptocurrencies can be much more difficult to track than traditional fiat currencies “due to their anonymized nature, which complicates international law enforcement efforts to detect and track illicit transactions.”

“Decentralized platforms (De-Fi) such as mixers can further obfuscate the origin of cryptocurrencies and have been heavily utilized by cybercriminals and authoritarian regimes such as North Korea, Russia, and Iran to launder stolen funds,” she told Arab News.

As a result, the US government has moved to enforce tighter controls on mixers — services that blend the cryptocurrencies of several users to obscure their origins and owners.

Iranians shop at the Molavi bazaar in southern Tehran on June 20, 2021. (AFP)

“The US Department of the Treasury has taken several major steps against mixer platforms this year, sanctioning two high-profile cryptocurrency mixer platforms under allegations that the platforms were used to enable cybercriminals and adversarial governments to launder stolen crypto funds,” Plucinski said.

“In May, the Treasury Department sanctioned one platform,, and in August, it sanctioned Tornado Cash.”

In sum, she said, “while these efforts may help ameliorate the abuse of some De-Fi platforms, it will likely have little impact on Iran’s use of cryptocurrency to engage in foreign trade to evade US sanctions.”

Closing bell: Saudi stocks close higher for third consecutive day

Closing bell: Saudi stocks close higher for third consecutive day
Updated 27 March 2023

Closing bell: Saudi stocks close higher for third consecutive day

Closing bell: Saudi stocks close higher for third consecutive day

RIYADH: Saudi Arabia’s Tadawul All Share Index rose for the third session in a row on Monday as it went up 4.25 points – 0.04 percent – to 10,463.61, as investors’ confidence grew on encouraging market conditions. 

On Monday, parallel market Nomu also went up, by 16.15 points or 0.908 percent, to close at 19,247.78, while the MSCI Tadawul 30 Index went down by 0.23 percent to 1,420.29. 

The total trading turnover of the benchmark index was SR7 billion ($1.86 billion).

Takween Advanced Industries Co. led the gainers, as its share prices went up 9.95 percent to SR8.62. 

Other top gainers of the day were Al Kathiri Holding Co. and Zain KSA, whose share prices rose 9.89 percent and 7.43 percent respectively. 

SABIC Agri-Nutrients Co. was the worst performer, with its share price dropping 8.61 percent to SR127.40. 

On the earnings front, Arab Sea Information System Co. incurred a net loss of SR10.43 million in 2022, compared to a net profit of SR21.6 million in 2021. Despite the loss reported, the company’s share prices surged by 3.95 percent to SR81.50. 

Another firm that reported losses in 2022 was Sadr Logistics Co. The company reported a net loss of SR7.2 million, versus a net profit of SR3.6 million a year earlier. Even though the firm incurred loss, its share prices rose 2.94 percent to SR35. 

Wafrah for Industry and Development Co. revealed its net profit in 2022 was SR19 million, compared to the SR11 million net loss incurred in 2021. Driven by the rise in profit, its share prices rose by 1.20 percent to SR33.60. 

Meanwhile, Alamar Foods Co. also reported a net profit of SR115.25 million in 2022, down 1.83 percent from 117.40 in 2021. The company’s share prices closed at SR141.00, down 7.11 percent. 

Savola Group's net profit hit SR742.8 million, up 234.75 percent, compared to SR221.9 million in 2021. Driven by the rise in profits, the company’s directors recommended a 6.6 percent dividend payout, or SR0.66 per share, for 2022, according to a Tadawul statement. The company’s share prices were intact on Monday at SR27. 

The net profit of Saudi Networkers Services Co. also surged by 13.99 percent in 2022 to SR32.32 million. As the profit of the company surged, the company’s share prices increased by 1.08 percent to SR56. 

Qatar launches new derivatives exchange framework

Qatar launches new derivatives exchange framework
Updated 27 March 2023

Qatar launches new derivatives exchange framework

Qatar launches new derivatives exchange framework

RIYADH: Qatar’s stock exchange will introduce a new derivatives market that allows the trading of options and future contracts on local stocks and the main equity index, the country’s financial center regulatory authority announced on Monday.

After a three-month consultation with investors and market participants, the Qatar Financial Centre Regulatory Authority announced the new regulatory framework for listed derivatives.  

“The launch of the derivatives exchange will be an important milestone in the development of the Qatar capital markets and Qatar’s ambition to move to developed market status,” said the stock exchange’s acting CEO, Abdulaziz Al-Emadi.  

Option contracts give their holders the right, but not the obligation, to buy or sell shares of the underlying company at a specific price on or before a certain date, usually referred to as the expiration day.

Future contracts on the other hand are types of derivatives whereby the involved parties transact shares of a specific company at a predetermined future date and price.

The exchange also plans to set up an entity that will provide clearing and settlement services for trades in options and derivative contracts, QFCRA said in a statement.

The market will allow options, contracts linked to underlying assets, and futures, contracts set at a future date, to be traded in local stocks and the market’s equity index. 

Michael Ryan, CEO of the QFCRA, added: “The regulatory authority looks forward to working with the Qatar Stock Exchange to launch the new derivatives exchange, as this exchange will provide opportunities that allow investors to better manage and diversify their financial portfolios.” 

The bourse’s rules also enable the central clearing house to manage settlement risks and ensure an efficient settlement process. 

Al-Emadi added: “The issuance of the Derivatives Markets and Exchanges Rules for the year 2023 establishes the necessary regulatory framework for the Qatar Stock Exchange to move forward with its plans to establish a derivatives exchange and the counterparty to the central clearing house.” 

According to the American finance company and index benchmarker MSCI, Qatar, is still identified as an emerging market. The leading liquefied natural gas exporter is now redirecting its focus to the development of its equities market by opening it up to a wider investor base and introducing more listings.  

In January, Qatar’s bourse welcomed its first initial public offering, IT services firm MEEZA, in almost three years under new regulations which allowed companies to offer a price range to test investor appetite and determine pricing.

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  
Updated 27 March 2023

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

RIYADH: Presight AI, a data analytics firm owned by Abu Dhabi’s G42 Group, has listed and started trading its shares on the First Market of the Abu Dhabi Stock Exchange.  

The initial public offering, which raised roughly 1.822 billion dirhams ($496 million) in proceeds, witnessed strong demand from retail and professional investors.  

The IPO was oversubscribed by 136 times, excluding the commitment from the company’s cornerstone investor, International Holding Corporation.  

Presight’s shares are also certified to be Shariah compliant, according to an announcement by the Shariah Board of Dubai Islamic Bank, the IPO’s lead manager.

“We are delighted to have completed Presight’s IPO, and to begin our next chapter as only the second technology company to be listed on the ADX, reinforcing our position as a pioneer in the industry,” Mansoor Al Mansoori, chairman of Presight, said.  

Presight’s IPO now gives investors the opportunity to own a share of the data analytics company powered by AI, hence enabling positive societal impact. The company’s products are used in three major industries with significant impact and market development potential including public services, finance and sports.  

Al Ansari completes IPO  

UAE-based exchange house Al Ansari Financial Services announced that the final offer price for its IPO has been set at 1.03 dirhams per share, which is at the top of the previously indicated price range from 1.00 dirhams per share.  

The statement comes after the book-building and subscription processes for its IPO on March 24, have been completed. Al Ansari raised 773 million dirhams with its IPO.  

Last week, the company expanded the size of its retail offering from 5 percent of the share capital to 7.5 percent in response to strong investor demand.  

The dividend yield will be at least 7.8 percent at the listing price, and the market value of the group will be 7.73 billion dirhams.  

Following the completion of the IPO, Al Ansari Holding will continue to own 90 percent of the group’s issued share capital.  

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023
Updated 27 March 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

RIYADH: State-owned Saudi Electricity Co. has announced that it intends to allocate between SR30 billion ($8 billion) and SR35 billion for its 2023 capital expenditure, according to the company’s 2022 financial presentation. 

This is at least 10 percent higher than the electric power distribution firm’s 2022 capex which stood at SR27.4 billion. 

Even though SEC did not provide a clear breakdown of the allocated amount, it is projected that expenditure in transmission and distribution infrastructure will be a priority considering that they dominated the firm’s capital expenditure for the past three years.  

In addition to this, SEC shed light on plans to further grow and expand its fleet, develop its distribution as well as transmission pipelines, and potentially achieve 23 percent automation within its distribution grid.  

Between 2021 and 2022, the firm experienced a 0.6 percent surge in generation capacity from 83,036 MW to 83,539 MW.  

Similarly, total load also rose 1.8 percent in the same period to reach 65,301 MW in 2022, up from 64,161 in 2021.  

On the other hand, the energy produced increased 2.6 percent to hit 191,964 GW in 2022, up from 168,985 GW a year earlier.  

Meanwhile, SEC’s fuel consumption hit 348 million barrels of oil equivalent, or mmboe, per day in 2022, reflecting an 8.1 percent boost compared to 2021’s 332 mmboe a day. 

As for the total number of substations, they rose to reach 1,209 in 2022 in comparison to the 1,190 reported back in 2021. Consequently, this accounted for a 2.8 percent increase in transformers’ capacity.  

With regard to the number of registered customers, the company registered a 4 percent jump to reach 10.9 million in 2022, up from 10.5 million in 2021.  

Established in 2000, SEC has monopolized generation, transmission and distribution of electric power in the Kingdom through 45 power generation plants in the country. 

The firm’s vision revolves around achieving integration of the environment, economy and social issues into the firm’s corporate cultural and economic values in order to accomplish the greater objectives of sustainable development. 

New law allowing foreigners to buy all kind of properties in KSA soon: Top official

New law allowing foreigners to buy all kind of properties in KSA soon: Top official
Updated 27 March 2023

New law allowing foreigners to buy all kind of properties in KSA soon: Top official

New law allowing foreigners to buy all kind of properties in KSA soon: Top official

RIYADH: Saudi Arabia is planning to relax its property ownership laws for foreigners as the Kingdom eyes attracting investments into the real estate sector as part of its strategy to diversify its economy. 

The new law that will allow foreigners to buy all kinds of real estate properties is “in its final stages and will be made public in a short period,” revealed the Kingdom’s Real Estate General Authority chief Abdullah Alhammad. 

This comes after Saudi Arabia issued a directive in 2021 allowing non-Saudis, legal residents of the country to buy single property with some conditions.  

But the REGA CEO pointed out that the new law will be “broader and more comprehensive than the current law” for real estate ownership, as foreigners will be able to buy any kind of property including commercial, residential, and agricultural in accordance with the regulations. 

The earlier law had prohibited foreigners from buying properties in holy cities, but Alhammad said, “the initial reading of the law shows that it allows foreigners to own property everywhere in the Kingdom, including Makkah and Madinah.” 

He clarified that any concerns about the negative effects of foreign ownership of the property were monitored in advance while solutions were developed for all problems and unacceptable practices. 

Saudi Arabia is looking to transform its real estate sector by bringing in new laws while making the sector attractive to foreign investors as the Kingdom eyes to improve the sector’s contribution to the national gross domestic product.  

The Kingdom’s latest move can open up new investment destinations for expats and global investors looking for green pastures, away from traditional markets, including the UAE.  

Amid rising urbanization, Saudi Arabia’s major cities including Riyadh and Jeddah have been chronically under-supplied – something that industry reports suggest is driving property prices high, making it unaffordable to many.  

Saudi Arabia’s Real Estate General Authority acknowledged that real estate prices in Saudi Arabia are high on a supply-demand imbalance. 

Expressing concern about the rising property prices, the REGF chief said high prices negatively impact the real estate sector. 

He pointed out that the majority of people looking for real estate today lack the means to buy and the price of the property today is more than the purchasing power, making it challenging to find a suitable property. 

“The investors were also affected by the high prices of the real estate,” noted Alhammad. 

He explained that the landowners are unable to make easier transactions due to the high prices of the land. "When the landowner wants to sell, he reduces prices to be able to sell it.”  

According to Alhammad, the real estate market is an open market subject to supply and demand. 

The authority’s chief also noted that the initiative to impose taxes on white lands was taken in 2017.  

White land is basically vacant land that is allocated for residential, or commercial residential use, and located within the urban boundary limits in the Kingdom. 

In 2016, Saudi Arabia decided to capitalize on undeveloped land in urban areas, which makes up 30 percent of those areas. The government decided to impose a 2.5 percent tax, based on land value, on landowners who had purchased plots but left them undeveloped. 

By way of imposing the White Land Tax, the government wants to increase the volume of plots available for development in urban areas.  

REGA chief added that the Ministry of Municipal and Rural Affairs started working on plans to boost or raise the efficiency of fees by an additional 10 percent.