LIVE MARKETS-Hormuz crypto tolls raise questions for the dollar

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HORMUZ CRYPTO TOLLS RAISE QUESTIONS FOR THE DOLLAR

Iran's demand that ships pay digital currency tolls to transit the Strait of Hormuz is a geopolitical flashpoint - and potentially a warning signal for the dollar.

Iran plans to require vessels to notify authorities of their cargo by email before passage and then pay a transit fee in cryptocurrency, according to Hamid Hosseini, a spokesperson for Iran's Oil, Gas and Petrochemical Products Exporters' Union.

Hosseini told the Financial Times that tolls would be set after assessing each vessel, at around $1 per barrel of oil, and paid within seconds in bitcoin to avoid sanctions.

While passage through Hormuz is a major sticking point in the talks, reports about Iran seeking tolls in crypto or in Chinese currency highlight the growing ability of digital payments to bypass the dollar-based system, according to Andrea Filtri, head of Mediobanca Research.

"New technologies allow the creation of parallel international payment systems to the incumbent one based on the USD," Filtri writes in a note to clients, while noting the rising use of China's CIPS system.

"The paradox is that - unlike for similar situations in the past - a war sponsored by the USA is potentially pushing money flows away from the USD," he adds.

Filtri says the shift bolsters the case for Europe to push ahead with a digital euro. He argues banks should accept it "will be a reality soon" and prepare to distribute it, warning that those slow to adapt risk being left behind.

(Danilo Masoni)

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