US widens Iran crypto sanctions as dollar threat revives Bitcoin, gold debate

The United States expanded sanctions exposure for Iran's crypto sector under Operation Economic Outcast. Treasury Secretary Scott Bessent launched the campaign on Aug. 24. The campaign targeted nearly 60 individuals, entities and vessels. The campaign opened Iran's digital assets, technology, gold, aviation and shipping sectors to broader sanctions. Treasury said foreign businesses that continue dealing with Tehran could face secondary sanctions. Bessent said entities facilitating Iranian money laundering could be removed from the US dollar system. Under Executive Order 13902, OFAC can sanction any person, regardless of location, that it determines operates in Iran's digital-asset sector. Treasury said the same authority applies to Iran's technology, gold, aviation and shipping sectors. US rules block Iranian digital-asset exchanges within US jurisdiction. Foreign financial institutions can face penalties for significant transactions involving sanctioned Iranian exchanges. Treasury said Tehran has increasingly used cryptocurrency for sanctions evasion and transactions linked to the IRGC and regime insiders. Treasury said Ivan Obukhov processed more than $100 million in cryptocurrency payments since 2023 for oil sales involving the IRGC-Quds Force. OFAC sanctioned Obukhov and his company, Foscom FZE. Treasury also targeted Iranian cyber actors accused of attacking US infrastructure and stealing funds. The broader measures expose foreign financial institutions to sanctions or restrictions on access to US correspondent banking for significant Iran-related transactions. Bessent declined to immediately sanction major Chinese financial institutions suspected of facilitating Iranian trade. Bessent said Washington would first give countries and companies time to change their behavior. China said its cooperation with Iran complied with international law. China said it would take necessary measures to protect its interests. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said Iran's trading partners would disregard the US threats. President Masoud Pezeshkian said sanctions and nearly six months of conflict had contributed to many problems in Iran. Iran vowed to retaliate against the expanded US measures. The campaign revived comparisons with the Western immobilization of roughly $280 billion in Russian sovereign assets after Russia's invasion of Ukraine. Bitwise Chief Investment Officer Matt Hougan said the freezing of Russian reserves accelerated demand for gold and Bitcoin. Central banks bought more than 1,100 metric tons of gold in 2022. Central banks bought more than 1,000 tons again in 2023. The World Gold Council cited geopolitical uncertainty and inflation as reasons for central-bank gold demand. Bitcoin rose as high as $80,887, its strongest level since mid-May. Bitcoin gained 27% in August. Gold reached a three-month high. The rally was attributed primarily to a weaker dollar, increased Treasury buybacks of long-dated debt, renewed crypto optimism and demand for alternative assets rather than the Iran sanctions themselves. The immediate impact of the campaign could be negative for Iran-linked crypto activity as exchanges, brokers, stablecoin issuers and banks tighten compliance. The longer-term question is whether repeated use of the dollar system could encourage governments and investors to seek alternatives such as Bitcoin and gold.