Iran offers insurance lifeline for ships crossing Hormuz

Iran has turned its blockade of the Strait of Hormuz into the ultimate bargaining tool, and it has now come up with an insurance policy for ships passing through the passage.

The Strait of Hormuz is a major maritime chokepoint that handles approximately 20% of the global petroleum and liquefied natural gas (LNG) supply.

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Following the beginning of the war between the U.S.-Israel combine and Iran in late February, the West Asian country has been leveraging its control of the maritime passage to its advantage.

Major shipping firms and marine insurers suspended Hormuz operations due to missile, drone, and mine risks. The blockade of oil supply has led to its price surging near $110 a barrel, with inflation fears plaguing the global markets.

In April, Iran outlined new terms for ships passing through the Strait of Hormuz, as per which ships are required to report detailed cargo and vessel information, undergo background checks, and follow designated routes closer to Iran’s coastline.

The country also revamped the passage's payments system by introducing Bitcoin (BTC) payments to bypass global sanctions.

Now, there is a new insurance scheme for ships passing through the critical passage.

More on Strait of Hormuz:

• Strait of Hormuz is choking Bitcoin, not just oil. But there's a catch
• Iran sets strict terms for ships crossing Hormuz after ceasefire
• Scammers are demanding Bitcoin from Ships trapped in the Strait of Hormuz

Iran plans insurance for ships passing through Hormuz

Fars News, a news agency considered close to Iran's Islamic Revolutionary Guard Corps (IRGC), reported on May 18 that the country's Ministry of Economy is working on a plan to "make the management of the Strait of Hormuz possible through insurance."

The framework would enable the issuance of various marine insurance policies and certificates of financial responsibility. The insurance would cover inspection, detention, and confiscation, but it wouldn't cover damages from weapon strikes.

The model would let Iran exercise control over the Strait and be acceptable to other countries during peacetime, as per the ministry. It would also allow Iran to distinguish between the transit of vessels from different countries.

As per the report, the insurance scheme-based management of the Strait of Hormuz would generate $10 billion in revenue for Iran. The publication didn't offer more details on the revenue estimate.

The ministry has been pursuing the insurance plan called Hormuz Safe since early May, and cryptographically verifiable insurance policies for shipments are on the cards, Fars reported.

The payments will be settled in Bitcoin, and the insurance will cover the shipment the moment the payment is confirmed. The cargo owner will also receive a signed digital receipt.

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Iran adopts crypto to evade sanctions

Iran has often sought to take advantage of crypto-based payment rails to evade sanctions.

The U.S. is well aware of Iran's attempts to access crypto-based payment rails to evade sanctions and keep seizing those assets.

In fact, the U.S. Treasury Secretary Scott Bessent shared last month that they have frozen $344 million in cryptocurrency allegedly linked to the Iranian government.

But such restrictive actions have not stopped the globally sanctioned country from adopting Bitcoin and other crypto payments.

Related: Treasury's $344M Iran crypto seizure now claimed by terrorism victims