The decision immediately allowed US companies to begin selling computers, tablets, mobile phones, software, satellite receivers and other equipment for personal use to Iranians, after such sales had been tightly restricted under sweeping sanctions on the country.
Also allowed were the sale and free provision of Internet communications like instant messaging, chat, email, social networking, sharing of photos and movies, web browsing and blogging.
The move came just two weeks before Iran's national elections, with the ballot lists dominated by conservatives loyal to Supreme Leader Ayatollah Ali Khameini while many challengers were blocked from running.
State Department spokesperson Jen Psaki said the action would allow Iranians to skirt the government's "attempts to silence its people" and exercise "the right to freedom of expression."
Iranians will be able to obtain "safer, more sophisticated personal communications equipment" to communicate with each other and the outside world, she said in a statement.
"We will use all the tools at our disposal, including licenses that facilitate communication and designations to target those responsible for human rights abuses, to help the Iranian people exercise these basic rights," said Treasury Department Under Secretary for Terrorism and Financial Intelligence David Cohen.
The move sought to ease some of the negative impact of sweeping, blunt sanctions by the US and its allies aimed at forcing Iran to rein in its alleged program to develop nuclear weapons capability.
And it aims at helping Iranians protect themselves from cyberattacks by people working for the Tehran regime to stifle dissent.
"Our hope is... this will help make some hardware and software, including things like antivirus software or software that helps protect from malware, more available to them and make them more able to protect themselves against government hackers," a senior US administration official said.
The move was not timed to the June 14 elections, the official said.
"This is a response to their efforts to deprive their citizens of their rights... The timing is really driven by the continued crackdown within Iran."
The US Treasury issued a general license allowing the sale of personal communications equipment and services by Americans. But a ban remained in place on selling to the Iranian government or any entity or individual specifically designated for US sanctions.
Trita Parsi, president of the National Iranian American Council, cheered the lifting of the ban as a move toward intelligent sanctions.
"We finally put an end to one of the worst examples of sanctions that hurt ordinary Iranians, undermine civil society and human rights, and empower the regime," Parsi said in an email to supporters.
"We now have an opening to address the other broad sanctions that are causing medicine shortages."
"We welcome this smart move," said Delphine Hagland, US director of Reporters Without Borders.
"But we have to be careful that this general license will not open the door for US companies to sell filtering technology to the Iranian authorities."
That was a reference to the Tehran authorities' ability in earlier years to buy US technology that allowed them to censor the Internet and spy on their citizens' online activities.
The Treasury also put sanctions on Asghar Mir-Hejazi, the deputy chief of staff for the supreme leader, and on the government censor, the Committee to Determine Instances of Criminal Content, for "contributing to serious human rights abuses... including through the use of communications technology to silence and intimidate the Iranian people."
In addition, the State Department announced it had placed visa restrictions on nearly 60 Iranians, mainly from the government, for their "role in the ongoing repression of students, human rights defenders, lawyers, artists" and others.
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