Iran to Offer Insurance for Strait of Hormuz Transit

Iran Proposes Bitcoin-Based Ship Insurance for Strait of Hormuz

Iran’s Supreme National Security Council has announced the formation of a new body, the Persian Gulf Strait Authority (PGSA), to manage the Strait of Hormuz. The PGSA will provide real-time updates on operations and developments in the strait.

According to reports, Iran is also proposing a new insurance scheme for ships transiting the strait and surrounding Gulf waters. The scheme would offer insurance products and encrypted verification capability for vessels operating in the strait. Transactions are expected to be conducted using cryptocurrencies such as Bitcoin.

The proposed insurance system could generate over $10 billion in revenue for Iran annually, according to reports. However, international shipping companies may view this as another form of transit charge.

Iran has previously collected ad hoc transit fees from commercial vessels within the first few weeks of the war, with payments reportedly reaching up to $2 million per voyage. The proposed insurance system appears to reshape this idea by tying safe passage and financial protection together.

The United Nations Convention on the Law of the Sea (UNCLOS) states that levies cannot be charged on ships sailing through international straits or territorial seas. Experts warn that Iran would face significant financial, legal, and operational obstacles if it were to implement such a scheme due to sanctions restricting its access to global financial and insurance markets.

The PGSA will provide updates on operations and developments in the strait, while the proposed insurance scheme aims to provide financial protection for ships transiting the area. The details of the proposal are still emerging, but it is likely to raise concerns among international shipping companies and governments worldwide.

Source: Al Jazeera