US Threatens to Shut Down Iraq’s Bank Account As Crypto Proponents Point to Censorship-Resistant Bitcoin
Iraqi officials tell The Wall Street Journal that the US government is threatening to cut off access to its central bank account held at the Federal Reserve Bank of New York. Such a move could further destabilize Iraq’s economy.
The Trump administration issued the warning last week, according to WSJ, in an effort to compel Iraq to think twice before booting American troops from the region. The threat follows heightened tensions between Iran and the US in the aftermath of the US military airstrike that killed top Iranian general Qassem Soleimani.
President Trump says Soleimani was orchestrating an attack on four US embassies, including the American Embassy in Baghdad. Soleimani’s death provoked a counterattack by Iran on two bases housing US troops, inciting fears of increasing military action and war.
But the Trump administration seemed to pull back and soften its rhetoric last week with a more conciliatory tone expressing the desire for peace in the Middle East. Instead of military action, it delivered the message by hammering Iran’s economy with harsh new sanctions on its multi-billion-dollar metal industry.
Crypto entrepreneurs and supporters are weighing in on the impact of the US strategy to pressure Iraq into maintaining the status quo of housing thousands of American troops, by commandeering its money supply.
Says Gabor Gurbacs, digital asset strategist at New York-based investment management firm VanEck,
“The weaponization of fiat currencies, payment railways and central banks continue during conflicts and everyday life. It’s only matter of time people start adopting independent, apolitical, non-sovereign monies and payment railways, such as Bitcoin.”
YouTuber The Crypto Lark,
“This kind of blatant extortion is why countries will move to bitcoin.”
Crypto analyst PlanB,
“Governments are weaponizing money, thereby degrading it to function as money. Today Iran, tomorrow they cut you off. Protect yourself with bitcoin.”
Bank account seizures stemming from political conflicts, economic agendas and policy mandates underscore a main tenet of cryptocurrencies and decentralized systems. Without the need for a bank or other financial institution, Bitcoin and similar digital assets allow individuals, organizations and governments to store, send and receive money without permission.
Iraq deposits revenue from oil sales into its account at the Federal Reserve Bank of New York, which held nearly $3 billion in overnight deposits at the close of 2018, reports CNBC. Those funds fuel the government, paying salaries and contracts.
While Prime Minister Adel Abdul-Mahdi argues that expelling the roughly 5,300 American troops is the only way to defuse the conflict in Iraq, the Wall Street Journal reports that Trump promptly issued the warning to freeze the central bank account in a phone call on Wednesday.
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