On August 24 local time, the US Treasury designated Iran's digital assets sector as a new sanctionable sector alongside technology, gold, aviation, and shipping. The Treasury stated that determining five sectors at once is unprecedented. Under this determination pursuant to Executive Order 13902, the US Treasury can now sanction individuals and entities that operate in these sectors or provide services supporting their operation, regardless of location. Individuals and entities involved in significant transactions to sell, supply, or transfer to Iran, or to import from Iran, significant goods or services used in connection with these sectors may also become subject to sanctions. The Treasury announced this action as part of 'Operation Economic Outcast,' simultaneously adding close to 60 targets, including individuals, entities, and vessels, to the sanctions list. Official materials stated that Ivan Obukhov, a Ukrainian national based in the United Arab Emirates, acted as a broker for Iranian shadow fleet vessels and processed more than $100 million in cryptocurrency payments to help facilitate oil sales on behalf of the Islamic Revolutionary Guard Corps Quds Force from 2023. Arman Kahzadian, who has focused on digital asset theft, was cited for illegally taking control of a wallet containing more than $30,000 in bitcoin in the summer of 2023. Property and interests in property of designated targets are blocked if they are located in the United States or held or controlled by US persons, and the same rule applies to entities in which a designated person holds a 50% or greater interest, directly or indirectly. Non-US financial institutions may also be exposed to secondary sanctions risk if they knowingly conduct or facilitate financial transactions for trade in significant goods or services related to these sectors, or significant transactions for designated targets. In such cases, the opening or maintaining of correspondent accounts, the accounts non-US financial institutions hold at US banks to process dollar settlement and transfers, may be prohibited or strictly conditioned. That said, this determination is not a rule that automatically prohibits all cryptocurrency transactions related to Iran, and actual application depends on whether there is sector activity or support, and on individual designations.
US Treasury Designates 'Digital Assets' Sector Under Iran Sanctions: Five Sectors Determined Simultaneously
Metanomia View
This action goes beyond adding specific wallet addresses to a sanctions list and widens the scope of sanctions judgment to include operating in, or supporting, the digital assets sector. Tracing information from public ledgers only functions as authority to cut off access to financial networks when exchanges, custodians, and banks decide to freeze accounts and refuse transactions, and Korean operators connected to US financial networks are not outside this structure. Because misjudging the link between an address and a transaction can block legitimate transactions as well, the transparency of the basis for judgment and the possibility of appeal matter as much as the enforcement power of sanctions.
Sources
- Treasury Launches Unprecedented Campaign Against Iranian Regime on Economic D-Day
- Trump's 'economic D-Day' threats become warnings for countries to sever financial ties with Iran
- US escalates Iran pressure with sanctions on crypto, aviation, shipping and gold as part of 'economic D-Day'
- U.S. targets digital assets, aviation, shipping, other areas for secondary sanctions on Iran