- SWIFT US’s tool to sanction war, now bypassed by EU and Iran
- EU mechanism to trade with Iran by evading US sanctions process first transactions
- Long Bitcoin, short the “US monetary hegemony”
A special trade vehicle designed to allow limited trade between the EU and Iran is now up and running, that will avoid sanctions from the United States.
Following a meeting of the six world powers and Iran to the 2015 nuclear deal that the US abandoned last year, European External Action Services said that this vehicle is operational, in a statement on Friday.
“France, Germany and the United Kingdom informed participants that INSTEX had been made operational and available to all EU member states and that the first transactions are being processed,” reads an excerpt of the statement published on the official website of the European Union.
The EU pledged to accelerate the cooperation with the Iranian corresponding entity (STFI) as well.
Bitcoin and Cryptocurrencies Could Play a Role Here
When first announcing the creation of the INSTEX in January, the EU said it would be “focusing initially on the sectors most essential to the Iranian population — such as pharmaceutical, medical devices, and agri-food goods.” However, this is far from the inflow of foreign trade promised by the JCPOA.
INSTEX basically provides a mechanism for EU companies to pursue transactions with Iran outside of Swift, avoiding the US sanctions and financial systems.
This system can also accelerate a broader acceptance of cryptocurrency in Iran, as previously reported.
The system is aimed at reducing the amount of cross-currency transactions and when too many imports are placed in Europe relative to export orders into Iran, Bitcoin here can play a role in direct currency exchanges that is central bank to central bank.
Iran already has a high interest in cryptocurrency as the government legalized Bitcoin mining in the country. Moreover, LocalBitcoins officially shut off its service for Iran-based users because of rising rial trading volume on the platform, US sanctions being the likely cause.
Iran even proposed state backed cryptocurrency to evade the sanctions.
INSTEX to Trigger Trump
The instrument in Support of Trade Exchanges (INSTEX) is aimed at facilitating trade with Iran by circumventing the sanctions imposed by the US after President Donald Trump pulled out of the 2015 nuclear deal last year and now wants a new agreement.
Though calling the meeting “positive” Iranian Deputy Foreign Minister Abbas Aragchi said:
“it is still not enough and it is still not meeting Iran’s expectations.”
The 2015 nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA) was the product of extensive diplomacy between Iran and the US and China, Germany, France, Russia, the UK, and the EU. Under the terms of this deal, Iran agreed to curb its nuclear activities in exchange for billions, which was opposed by Republicans and some US allies in the Middle East.
“Long bitcoin. Short US monetary hegemony,” responded a Bitcoin enthusiast to this news.
USA used SWIFT as a tool in its sanctions war and now Europe has developed INSTEX to bypass SWIFT. This will not only trigger Trump but will have geopolitical implications as well.
INSTEX: This was the first official shot across the bow of the USD status as a global reserve currency, and not by America’s adversaries but by its closest allies. The countdown to the end of the USD reserve status officially begins. #bitcoin
— Michael Fitzgerald (@blockchainfitz) June 29, 2019
Back in May, Sigal Mandelker, Treasury Department’s undersecretary for terrorism and financial intelligence warned that anyone associated with it will have to face “severe consequences” and further “loss of access to the U.S. financial system.” Geopolitical tensions will only further lead people to Bitcoin.