Iran collects Bitcoin on the surface, threatens to cut off the internet beneath the sea — Tehran is “strangling” the dollar system

Original: Odaily Planet Daily (@OdailyChina)

Author: Golem (@web3_golem)

Last month, during the Iran-US ceasefire, Iran announced it would collect transit fees in Bitcoin from oil tankers passing through the Strait of Hormuz. The news sparked discussions among crypto enthusiasts, who believed Bitcoin had finally played the role of "digital cash" in the most extreme geopolitical environment. Odaily's analysis at the time suggested this could be a geopolitical tactic, with Bitcoin acting as a smokescreen in the game, the core purpose being a public provocation against the US dollar system. (Related reading: Is Iran Just Bluffing About Paying Bitcoin for Strait Transit Fees?)

However, looking back a month later, what Iran has unleashed is a genuine "financial bomb." On May 18, Iran announced the launch of a state-backed digital maritime insurance platform, Hormuz Safe, to provide maritime insurance for vessels transiting the Persian Gulf and the Strait of Hormuz, settled in Bitcoin and other cryptocurrencies.

An official page for Hormuz Safe has been circulating online. The image shows that the digital insurance services of Hormuz Safe are aimed at Iranian shipping companies and cargo owners. Goods are insured from the date of confirmed shipment, and a signed receipt will be provided to the cargo owner.

Although the website is currently inaccessible (possibly due to node restrictions), the very plan to launch this platform proves that Iran's intention to collect Strait transit fees via Bitcoin is no longer just talk. Instead, it is building a "quasi-financial infrastructure" to gradually turn it into a viable and executable commercial reality.

Iran Aims to Reshape the Financial Order of the Strait of Hormuz

When Iran first announced its plan to collect Strait transit fees in Bitcoin, I pictured an extremely absurd scene: countless tankers in a traffic jam at the Strait of Hormuz, the holdup caused by an elderly captain at the front of the line staring at his phone at a Bitcoin transaction that remained unconfirmed by miners...

This crude, comical imagination amplifies Bitcoin's characteristics and importance, but considering the reality of "paying Strait transit fees with Bitcoin," Iran wouldn't be foolish enough to collect them on the spot like highway tolls or parking fees. It doesn't even need to be paid directly under the guise of a transit fee. Because the real backbone of modern international crude oil shipping is insurance.

The Strait of Hormuz chokes off about 20% of the global oil supply. Every tanker passing through this narrow waterway between Iran and Oman needs to purchase maritime insurance. Without insurance, banks won't provide financing, and no shipowner or port would dare to sail or offer berthing.

Traditionally, for the past few decades, these insurances have been underwritten and settled by Western financial institutions. Lloyd's of London, European and American reinsurers, SWIFT, etc., have jointly built an interlocking international insurance order for oil tankers, from which Iran is largely excluded.

Now, Iran is preparing to tear a hole in this insurance system from the payment perspective. Hormuz Safe, a digital maritime insurance platform backed by Iran's Ministry of Economic Affairs and Finance, intends to settle policies directly using Bitcoin and cryptocurrencies, without needing the SWIFT network or any Western intermediaries.

This is a plan to circumvent sanctions. The platform features blockchain instant settlement and digital signature receipts, creating a parallel insurance infrastructure that can operate without permission from any Western regulatory body. At the same time, it allows Iran to gain financial sovereignty, successfully bypassing the dollar-based financial system and avoiding pressure from the US using that system. The Iranian government believes that if this platform captures a significant share of the Persian Gulf shipping insurance market, it could generate over $10 billion in revenue.

This could even become the starting point for Iran's "de-dollarization," from restructuring the settlement system to the insurance system, and finally shaking the entire financial order of the Persian Gulf region. However, rationally speaking, the resistance to achieving this is immense.

Hormuz Safe attempts to use Bitcoin and blockchain technology to bypass the SWIFT network and Western intermediaries, reducing dependence on Western financial infrastructure. The ideal is good, but reality may not offer recognition. Because the global trade system is not just a technical system; it is a power system built on credit and force.

Therefore, bluntly speaking, without the nod of the United States, the insurance provided by Hormuz Safe might not be recognized by any institution or port. Even if shipowners are willing to accept Hormuz Safe, once they leave the Persian Gulf and the Strait of Hormuz, most of the world's ports, banks, insurance companies, and exchanges still operate within the dollar system, making insurance issued by Iran worthless. Moreover, under the US "way of doing things," any shipowner, trading company, or port management authority that interacts with Hormuz Safe is highly likely to trigger secondary sanctions risks.

Therefore, the actual customer base of Hormuz Safe may be limited to vessels already operating in the grey area of US sanctions.

Iran is Financializing its Geopolitical Control

However, even though Iran is relatively weak in the international financial system, the reality is that it still holds the geopolitical advantage. At least regarding the openness of the Strait of Hormuz, the United States no longer has the final say unilaterally.

Regarding the current US-Iran situation, the Trump administration has consistently projected an optimistic and confident stance externally. On May 19, Trump called off a planned strike on Iran, stating that there had been "some very positive developments" in negotiations. However, Iran has shown the outside world an unyielding attitude. Iran's Supreme Leader's military advisor, Rezaei, responded strongly to Trump canceling the latest military strike, saying, "The iron fist formed by the powerful armed forces and the great Iranian nation will force them to retreat and surrender."

Furthermore, on May 19, Iran's Supreme Leader, Mojtaba Khamenei, reiterated on social media that if the "state of war" continues, he would consider opening new fronts in areas where the enemy is not proficient, while emphasizing that "the enemy has very little experience and is extremely vulnerable in these areas." The core of these new fronts Iran speaks of might lie in the continuous financialization of its geopolitical control.

When the US-Iran standoff first formed, Iran used the threat of closing the Strait of Hormuz as a strategic bargaining chip, causing significant disruption to international financial markets and US politics. But in reality, "blockade" is the crudest way to use geopolitical control. Completely closing the strait would impose a huge cost on Iran as well. The truly advanced approach is to directly convert this geographical advantage into sustainable financial benefits and financial rules. The former only destroys order, while the latter reshapes it; combining geopolitical threats with economic threats makes the opposing side more anxious.

Iran is already doing this. In addition to setting the rules for tanker passage on the surface, Iran is also eyeing the submarine communication cables lying beneath the sea.

In early May, Iranian military spokesman Ebrahim Zolfaghari stated on X that Iran "will charge fees for internet cables" (specific charging methods not yet disclosed). Beneath the Strait of Hormuz lie submarine cables carrying massive volumes of internet and financial data traffic connecting Arab countries with Europe and Asia. This data affects financial systems, AI, and people's daily work and lives, creating an incalculable economic value.

Iran also threatened that if companies using the submarine cables do not pay the license fee, it might implement a "network blackout" strategy, specifically naming US tech giants like Google, Microsoft, Meta, and Amazon. Following the news, maritime intelligence and data provider Windward stated that this declaration by Iran has prompted ASN (Alcatel Submarine Networks), one of the world's largest submarine cable installers, to suspend all maintenance operations in the region.

From the oil tanker insurance policies on the sea surface to the fiber optic data beneath the sea, everything passing through the Strait of Hormuz is being redefined by Iran as a "chargeable asset" – a "trick or treat" approach. At this moment, the physical vulnerabilities of capital and financial markets have become Iran's most handy weapons.

The surface of the Strait of Hormuz may appear calm, but Iran has already put a knife to America's throat.