Iran has turned the Strait of Hormuz into a cryptocurrency hub. According to Fars News reports, Iran has launched ‘Hormuz Safe,’ a state-sponsored digital maritime security platform.
The Iranian government intends to use this platform to implement marine insurance policies for vessels that pass through the Strait of Hormuz and the Persian Gulf. Notably, settlements will be conducted in Bitcoin [BTC] and select other cryptocurrencies.
Previously, maritime insurance was settled through Western financial institutions, from which Iran was largely excluded. With ‘Hormuz Safe,’ the reliance on SWIFT and other Western intermediaries will be removed.
Why is this move bullish for the crypto market?
Furthermore, by utilizing Bitcoin, Iran avoids the dollar-based financial system that provides Washington with power. This action comes as formal negotiations between the U.S. and Iran are at a standstill and tensions are rising. This continues to happen despite a ceasefire in place since early April.
Iran views this as a strategic opportunity, given that 20% of the world’s daily oil supply passes through the Strait of Hormuz. The platform is projected to generate up to $10 billion in revenue, but only if it secures a substantial share of the Persian Gulf shipping insurance market.
Notably, this isn’t the first cryptocurrency move tied to the Strait of Hormuz. Iran had announced that it would levy a $1 fee per barrel of oil transported by ships attempting to cross the Strait of Hormuz.
Current market dynamics
Having said that, the “Hormuz Safe” plan is published at a time when the cryptocurrency market is in a “fear” zone. The global market capitalization has also decreased by 1.54% to $2.56 trillion at press time.
However, Iran’s move is unduly optimistic for the crypto market, as it demonstrates the growing adoption of cryptocurrencies.
Final Summary
- Without SWIFT and other Western intermediaries, Iran’s ‘Hormuz Safe’ plan could be a major turning point.
- The global market cap drop and the market lying in the “Fear” zone at press time still raise concerns.