(Bloomberg) --Iran has started a Bitcoin-backed insurance service for Iranian shipping companies that want to transit the Strait of Hormuz, the semi-official Fars news agency reported, citing documents obtained from the country's Ministry of Economy and Financial Affairs.
According to a screen shot of the insurance company's website, dubbed Hormuz Safe and shared by Fars news, it "provides Iranian shipping companies and cargo owners with fast, verifiable digital insurance." Fars didn't give a detailed break down of how the insurance works and whether it's available to foreign shipping companies and vessels.
Iran is heavily sanctioned by the US and its use of cryptocurrencies like Bitcoin and Tether has ballooned since President Donald Trump started targeting its economy and energy exports during his first administration.
Iran has effectively shut the Strait of Hormuz — a major conduit for global energy supplies and other goods — since the US and Israel began airstrikes against the country on Feb. 28. The government and the Islamic Revolutionary Guard Corps have since been looking to formalize control over the waterway, including imposing tolls and other fees. An insurance service could be another means to raise funds.
"Cryptographically verifiable insurance policies will be provided for shipments passing through the Persian Gulf, the Strait of Hormuz, and the surrounding waterways, and payments will be settled in Bitcoin,"
It's far from certain an insurance system for shipping based on Bitcoin would be feasible. Unlike so-called stablecoins that are pegged to a fiat currency like the dollar, Bitcoin is highly volatile — a feature that's meant its adoption as a means of payment has so far been limited. Foreign ship owners may also be hesitant to use such a mechanism for fear of breaching US sanctions on Iran.
Uneasy Ceasefire
The US and Iran have been observing an uneasy ceasefire since early April, and resolving the deadlock over the Strait of Hormuz is critical to any formal peace deal.
Trump issued a fresh threat against Iran on Sunday, telling Tehran to "better get moving, FAST, or there won't be anything left of them," according to a post on Truth Social. The two sides have repeatedly rejected each other's demands and can't agree on how to restart peace talks.
As their stalemate continues, more than 1,500 commercial vessels were trapped in the Persian Gulf as of early May, according to the US military. Oil producers in the region have been forced to severely reduce their output as they run out of space to store their crude.
The Iranian government and the IRGC have allowed some vessels to make the journey via a designated route close to Iran's coast, sometimes after requesting payments of as much as $2 million. In response, the US has blockaded Iranian ports.
On Monday, Iran's Supreme National Security Council officially launched the Persian Gulf Strait Authority, a body created to manage traffic in the Strait of Hormuz.
It's unclear the extent to which the Hormuz Safe insurance service is tied directly to the IRGC or the government's wider plans to consolidate an official toll system. Fars is closely affiliated with the Guards.
Babak Zanjani, an Iranian businessman who made his wealth by helping the Islamic Republic evade sanctions, first started promoting the idea of an Iranian shipping insurance scheme for the Strait of Hormuz on May 8.
Zanjani — who was released from prison last year after having his death sentence commuted — shared the first details of Hormuz Safe to his followers within minutes of publication of the Fars news report. He had previously been arrested for embezzling billions of dollars from Iran's oil ministry.
Reports on Hormuz Safe coincided with a statement by an Iranian lawmaker that a professional mechanism to manage traffic in the strait along a designated route would be unveiled by the Islamic Republic soon.
Ebrahim Azizi, head of Iran's parliamentary commission for national security, said "only commercial vessels and parties cooperating with Iran will benefit."
"The necessary fees will be collected for the specialized services provided under this mechanism," Azizi said in a statement on X, adding that parties involved in the US-Israeli war on Iran would be banned from accessing the route.
Esmail Baghaei, Iran's foreign ministry spokesman, said Monday that Iranian and Omani officials held meetings last week to discuss joint efforts to "develop a mechanism" to provide safe passage for ships transiting the Strait.
