ICYMI - Iran launches Bitcoin-backed ship insurance scheme for Strait of Hormuz transit

Iran has launched a Bitcoin-backed shipping insurance service for Hormuz Strait transits, as Tehran simultaneously unveiled a new authority to formally manage strait traffic and collect transit fees.Summary: Source: Bloomberg (gated), citing Fars news agency and documents from Iran's Ministry of Economy and Financial Affairs.Iran has launched Hormuz Safe, a Bitcoin-backed insurance service for Iranian shipping companies transiting the Strait of Hormuz and surrounding waterwaysThe service promises cryptographically verifiable insurance policies with payments settled in Bitcoin, covering shipments from the moment of confirmationIran simultaneously launched the Persian Gulf Strait Authority, a formal body to manage Hormuz traffic, collect fees and designate approved transit routesSome vessels have already been permitted to transit via a coastal route, with payments of up to $2 million reported in some casesBabak Zanjani, an Iranian businessman with a history of sanctions evasion who was released from prison last year after a death sentence was commuted, first promoted the insurance scheme on 8 May and shared details of Hormuz Safe within minutes of the Fars reportAn Iranian lawmaker said only commercial vessels cooperating with Iran would benefit, with parties involved in US-Israeli military action banned from the routeMore than 1,500 commercial vessels were trapped in the Persian Gulf as of early May, according to the US militaryIran and Oman held meetings last week to discuss a joint mechanism for safe passage through the strait Iran has launched a Bitcoin-backed shipping insurance service for vessels seeking to transit the Strait of Hormuz, in a move that signals Tehran is constructing the formal architecture of long-term control over the waterway rather than preparing for an imminent reopening.The service, called Hormuz Safe, was reported by the semi-official Fars news agency citing documents from Iran's Ministry of Economy and Financial Affairs. According to the scheme's website, it provides Iranian shipping companies and cargo owners with digital insurance policies that are cryptographically verifiable, with premiums and claims settled in Bitcoin. Coverage begins from the moment of confirmation, with a signed digital receipt issued to the cargo owner.The announcement coincided with Iran's formal launch of the Persian Gulf Strait Authority, a new government body established to manage traffic through the strait, collect transit fees and designate approved shipping routes. An Iranian lawmaker made clear the mechanism would be exclusive, stating that only vessels and parties cooperating with Iran would be permitted to use the route, with those linked to US or Israeli military operations explicitly banned.The credibility of a Bitcoin-based insurance mechanism faces obvious challenges. Bitcoin's price volatility makes it a poor foundation for insurance liability calculations, and foreign shipowners face the additional deterrent of potential US sanctions violations if they engage with any Iranian-run financial scheme. The website for Hormuz Safe does not appear to be accessible outside Iran.The figure behind the initiative adds further complexity. Babak Zanjani, an Iranian businessman who built his fortune helping the Islamic Republic evade international sanctions, first floated the insurance concept on 8 May and circulated details of Hormuz Safe almost immediately after the Fars report was published. Zanjani was released from prison last year after a death sentence for embezzling billions from Iran's oil ministry was commuted.With more than 1,500 commercial vessels trapped in the Persian Gulf as of early May and oil producers cutting output as onshore storage fills, the pressure for a resolution remains acute. Iran and Oman held talks last week on a joint safe passage mechanism, though no agreement has been announced.Not sure this is what Trump had in mind as the crypto President!---The formalisation of Iranian control over Hormuz through a dedicated traffic authority, a toll system and now a crypto insurance mechanism signals that Tehran is building the institutional architecture for a prolonged closure rather than a temporary bargaining position. For oil markets, that is a structurally bearish signal on any near-term reopening timeline. The Bitcoin insurance scheme, however novel, is unlikely to attract significant foreign shipping participation given US sanctions exposure, but its existence alongside the Persian Gulf Strait Authority suggests Iran is preparing for a sustained revenue-generating operation rather than a negotiated handover. The involvement of Babak Zanjani, whose history is built on sanctions evasion, will heighten Western scrutiny of any vessel that does engage with the scheme.