Iran establishes Strait Authority and proposes Bitcoin insurance amid Hormuz closure
Tehran’s plan to settle maritime transit fees in cryptocurrency faces immediate legal and operational hurdles, including US naval blockades and international law prohibitions.
Iran’s Supreme National Security Council has announced the formation of the Persian Gulf Strait Authority (PGSA) to manage operations in the Strait of Hormuz, marking a formalisation of Tehran’s control over the critical waterway. The announcement accompanies a proposal for a cryptocurrency-based insurance scheme for transiting vessels, a move that has been universally rejected by major global powers including the United States and China. The PGSA will provide real-time updates on developments in the strait, which serves as a vital chokepoint for approximately 20 per cent of the world’s oil and gas in peacetime.
The insurance initiative, reportedly accessible via the Hormuz Safe website, offers maritime coverage for cargoes with payments settled in cryptocurrencies such as Bitcoin. Tehran estimates the scheme could generate more than $10 billion in annual revenue. This structured approach follows weeks of ad hoc transit fees, with some payments reaching $2 million per voyage, as Iran effectively closed the strait in retaliation for a US-Israeli military campaign that began on 28 February 2026.
International opposition to the proposal is firm. The US Department of State has stated that international waterways must remain open to global shipping and that no country should impose unilateral tolls. Following discussions between US President Donald Trump and Chinese President Xi Jinping, Beijing confirmed its opposition to the militarisation of the strait and any efforts to charge for its use. UN Secretary-General Antonio Guterres has also called for the immediate opening of the passage without discrimination or tolls.
Legal and operational experts warn that the scheme faces significant obstacles. Abdul Khalique, head of the Liverpool John Moores University Maritime Centre, noted that international law, specifically the United Nations Convention on the Law of the Sea, prohibits levies on ships sailing through international straits. Furthermore, sanctions restrict Iran’s access to global reinsurance markets, raising doubts about the scheme’s ability to pay claims. The use of Bitcoin also presents challenges, as many governments associate cryptocurrency transactions with sanctions circumvention and money laundering risks.
Geopolitical realities further complicate the proposal. Since 13 April, the United States has implemented a naval blockade of all ships coming from or going to Iranian ports, casting doubt on whether any vessel paying Iran for insurance would be permitted to transit. While some insurers have re-entered the market with government-backed support, such as Chubb’s participation in a $20 billion US-supported programme, many shipping companies continue to avoid Gulf routes due to safety concerns. No country or shipping firm has yet announced plans to utilise Iran’s insurance offer.
