US sanctions two Iranian companies for Bitcoin insurance in the Strait of Hormuz

The U.S. Treasury Department sanctioned two Iranian companies for enforcing "insurance" and accepting bitcoin in the Strait of Hormuz

The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) imposed sanctions on two Iranian maritime companies, accusing them of plotting a plan to force commercial ships to purchase "insurance" when passing through the Strait of Hormuz, and one of the companies also accepted bitcoin and other digital assets as payment methods.

Iranian company sanctioned over insurance scheme

OFAC said both companies are linked to the powerful branch of Iran's armed forces, the Islamic Revolutionary Guard Corps (IRGC). Through the Strait of Hormuz, a key choke point that handles about 20% of global oil shipments, the Islamic Revolutionary Guard Corps requires ships to purchase marine insurance. The policy was approved by the Persian Gulf Strait Authority, which Washington added to the sanctions list in May this year, and the insurance business is represented by the state-backed Persian Gulf Marine Insurance Company.

According to the U.S. Treasury Department, this insurance mainly covers risks arising from the Iranian government's own actions, such as possible seizure of ships. U.S. officials described the request as an extortion mechanism designed to raise funds for the Iranian regime and its affiliates.

U.S. Treasury Secretary Scott Bessent stressed that the Iranian regime is "in urgent need of cash" and its economic situation is deteriorating and inflation has reached triple digits. Besent warned that the United States would not allow Iran to "hold global commerce hostage."

Use Bitcoin and digital assets to circumvent sanctions

The second sanctioned company, the Hormuz Security Maritime Services Administration, was established by the Iranian Ministry of Economy. The company claims to be a provider of traffic control, security, Incident Response Service and insurance services for ships in the Strait, and accepts Bitcoin and other cryptocurrencies for payments for related services. The U.S. Treasury Department pointed out that accepting digital assets is a deliberate move to circumvent Western financial sanctions.

Iranian financier Babak Mortaza Zanjani, who was sanctioned earlier this year, publicly promoted Hormuz Security to his followers online.

Micro Dictionary: OFAC (Office of Foreign Assets Control) is an agency of the U.S. Treasury Department responsible for enforcing and managing economic and trade sanctions in support of national security and foreign policy goals.

Earlier this year, media reported that Iran plans to introduce a cryptocurrency-based charging system for ships passing through the Strait, starting at US$1 per barrel. However, blockchain analysts have expressed doubts about whether these transactions use digital assets on a large scale. Ali Redbold, director of policy at TRM Labs, said there is no data showing large-scale cryptocurrency payments in Hormuz tolls. Others pointed out that the speakers cited in media reports did not directly represent the Iranian government. The latest actions from the U.S. Treasury Department indicate that at least one government-backed entity has now officially accepted Bitcoin for such transactions.

Blockchain analysts pointed out that as of April this year, despite previous announcements by Iranian officials, there was no substantial evidence that cryptocurrency was widely used to pay Hormuz tolls.

Sanctions extended to oil tankers and "shadow fleets"

As part of the same action, OFAC also sanctioned eight oil tankers and their operators, accusing them of involvement in transporting Iranian crude oil and petroleum products. Most of these companies are registered in Hong Kong. The United States said it has sanctioned more than 100 ships associated with Iran's so-called "shadow flotilla" since January this year.

According to the U.S. Treasury Department, Iran's maritime insurance program is designed to recoup lost revenue due to "Operation Epic Wrath," a previous U.S. enforcement action against Iran's illegal oil shipments.

The Strait of Hormuz remains the focus of the global energy market, and ongoing tensions affect security and business activities in the region.

Sanctioned entities and their activities and payment methods:

Persian Gulf Marine Insurance Company: Mandatory collection of Strait of Hormuz passage insurance, role as insurance agent, and payment method in traditional currency.

Hormuz Security Maritime Services Administration: Mandatory collection of insurance for passage through the Strait of Hormuz, providing insurance, transportation, and security services, and payment methods are in Bitcoin and digital assets.