The United States is continuing to target Iran's use of bitcoin. In a statement on Thursday, the U.S. Department of the Treasury designated BitBank, an Iranian crypto exchange, as part of Operation Economic Outcast — the Trump administration's whole-of-government economic campaign against the Islamic Republic of Iran and its enablers. Such designations by the Treasury's Office of Foreign Assets Control (OFAC) generally block any property the named parties hold under U.S. jurisdiction and bar U.S. persons from transacting with them.

The U.S. has sanctioned Iran for decades. This year, however, the Middle Eastern country has stepped up its use of cryptocurrencies — including bitcoin — in an effort to skirt around economic penalties. OFAC has in recent years pointed this same tool at digital asset services: in 2021, it designated the exchange SUEX — its first-ever sanctions action against a virtual currency exchange — for allegedly laundering ransomware proceeds.

“Today's designations of Iranian digital asset infrastructure make perfectly clear that efforts to finance the Iranian regime using cryptocurrencies are not beyond OFAC's reach,” Secretary of the Treasury Scott Bessent said in a statement. “If you support the Iranian regime, the Department of the Treasury will sanction you.”

The sanctions target Babak Zanjani, a designated Iranian financier, along with his software developer, Pishtaz Simorgh Electronic Trade Company, and three of Zanjani's associates: Hossein Ali Zaker Hossein, Mohammad Mahdi Zaker Hossein and Seyed Adel Heidari.

According to the Treasury, the Iranian Hormuz Safe Marine Services Authority has used BitBank since June to move bitcoin to the Iranian regime. Thursday's sanctions aim to hit the “architecture Zanjani built to launder funds,” the department added.

“The Department of the Treasury will continue to not only target the Iranian digital asset ecosystem, but also international entities and actors which help facilitate it,” the statement continued.

Iran's expanding use of crypto

Iran launched a bitcoin-backed insurance service for its shipping companies earlier this year. In July, the U.S. said it had frozen crypto linked to the Iranian regime, mostly in the form of Tether's stablecoin.

Stablecoins such as Tether's USDT can be frozen by the company that issues the asset. Bitcoin, being decentralized and without a single issuer, cannot.

The U.S. Treasury's Office of Foreign Assets Control said in July that Iran had been dodging sanctions by accepting payment in bitcoin from ships passing through the Strait of Hormuz, a waterway that carries a large share of the world's seaborne oil. OFAC said at the time that Hormuz Safe, developed by Iran's Ministry of Economy, “accepts payment in Bitcoin and other digital assets” so it can bypass sanctions.

This article was originally published on Bitcoin Magazine by Mathew Di Salvo.