TLDR

  • Iran is reportedly considering accepting Bitcoin or stablecoins as payment for oil tankers crossing the Strait of Hormuz
  • The strait handles about 20% of global oil supply, making this geopolitically significant
  • Chainalysis calls it a potential first for a nation-state demanding crypto for waterway transit
  • Analysts say stablecoins may be preferred over BTC due to liquidity and Iran’s past crypto habits
  • Shipping firms face serious compliance risks if they pay into IRGC-linked crypto wallets

(SeaPRwire) –   Iran is reportedly contemplating a plan to charge oil tankers cryptocurrency tolls for passage through the Strait of Hormuz, a critical global shipping route. This development was first reported by the Financial Times on Wednesday, citing a representative from Iran’s Oil, Gas and Petrochemical Products Exporters’ Union.

The Strait of Hormuz is a vital chokepoint, facilitating approximately 20% of the world’s oil supply. Reports indicate that Iran’s Islamic Revolutionary Guard Corps (IRGC) is involved in managing this proposed fee collection system.

According to the reported plan, ship operators would be required to submit details about their ownership and cargo before negotiating the applicable fees. These fees are said to begin at around $1 per barrel and could be settled in either Chinese yuan or digital assets.

Alex Thorn, head of research at the crypto firm Galaxy, has noted that there are conflicting reports regarding the payment options, suggesting that tolls might be payable in stablecoins or Chinese yuan, not exclusively Bitcoin. Galaxy is actively monitoring blockchain activity for any indications of such payments.

Thorn has estimated that the toll amounts could range from $200,000 to $2 million per tanker. The Financial Times reported that vessels would have a very brief window, “a few seconds,” to make payments in Bitcoin.

How Would Payments Actually Work?

This extremely short payment window suggests that the Lightning Network, a layer-2 Bitcoin payment solution designed for rapid transactions, might be utilized. The Lightning Network allows for transactions to be processed in seconds, bypassing the typical 10-minute block confirmation times of the standard Bitcoin network.

However, Thorn pointed out that the largest known Lightning Network transaction to date was $1 million, which might not be sufficient for higher toll amounts. He suggested that it is more probable that Iran would provide a QR code or a Bitcoin address for ships to make payments once their transit request has been approved.

Proponents of Bitcoin highlight its decentralized nature, noting that it has no central issuer and cannot be frozen, unlike stablecoins such as USDT or USDC, which can be blacklisted at the smart contract level.

Blockchain analytics firm Chainalysis issued a report on April 10, characterizing this development as a potential turning point. The firm stated that if implemented, this would mark the first known instance of a nation-state mandating cryptocurrency payments for transit through an international waterway.

Stablecoins May Be Iran’s Real Preference

Despite the prominent headlines focusing on Bitcoin, Chainalysis suggests that Iran might actually favor stablecoins. The firm referenced Iran’s documented history of utilizing stablecoins on a large scale for oil sales, financing weapons, and evading sanctions.

Stablecoins offer greater liquidity and less price volatility compared to Bitcoin, making them a more practical choice for substantial trade transactions.

For international shipping companies, the compliance risks are significant. Making payments to wallets associated with the IRGC could lead to enforcement actions under U.S. Treasury sanctions, irrespective of the currency used for the transaction.

Chainalysis emphasized that blockchain analytics tools are now indispensable for tracking these financial flows and assisting the global community in managing associated risks.

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