Four Decades After Sanctions: How Iran Rebuilds Financial Channels Through Crypto

Original Author: Jessica Davis, Insight

Original Compilation: Peggy, BlockBeats

Editor’s Note: Under more than four decades of intense sanctions pressure, Iran has been gradually squeezed out of the global financial network centered on the US dollar and the traditional banking system. This article uses a timeline as a clue to trace Iran’s evolution from oil embargoes and financial disconnection to the adoption of کرپٹوcurrency, illustrating how sanctions have objectively driven a restricted nation to build a parallel financial system.

In Iran, cryptocurrency is no longer merely a technological choice but has been incorporated into the national-level toolbox for sanctions evasion and geopolitical maneuvering. As this system intertwines with broader alternative financial networks, its impact has transcended Iran itself, pointing to the profound changes occurring in sanctions mechanisms, the global financial order, and the security landscape.

The following is the original text:

This article marks the beginning of an eight-part series examining how Iran is increasingly relying on cryptocurrency to evade international sanctions. These changes occur against a backdrop of high volatility: Iran’s confrontation with Israel in 2025, the ongoing activities of its regional proxy network, and waves of protests fueled by corruption, economic hardship (exacerbated by sanctions), and political repression.

Understanding how and why Iran has integrated cryptocurrency into its sanctions evasion strategy is crucial for assessing how it will respond to countermeasures in the future and what impact this will have on global security.

Iran’s cryptocurrency activities are also part of a larger narrative. I call it the “Axis of Illicit Finance”: an emerging alternative financial system involving other sanctioned or Western-adversarial states like Russia, Venezuela, and North Korea (DPRK), with China playing a key supporting role.

In the upcoming series, I will gradually unpack how this system operates, who benefits from it, and why it deserves more attention now than ever before.

Iran’s Sanctions Context

Iran has long employed highly adaptive financial strategies to mitigate the impact of international sanctions and continue supporting its regional proxy groups. These methods include shadow shipping fleets, networks of money service businesses and shell companies, and cash couriers. As sanctions have increasingly squeezed its access to the formal financial system, Iran and its affiliates have grown more reliant on cryptocurrency to bypass regulations and funnel funds to the “Axis of Resistance,” which includes Hezbollah, Hamas, the Houthis (Ansarallah), and Iraqi militias.

Although Iran’s cryptocurrency-based financing infrastructure is still developing, its complexity and reach are continuously improving, gradually integrating traditional financial systems with emerging digital mechanisms. Simultaneously, this system is increasingly embedded within an alternative financial system shaped by Russia and North Korea (DPRK) and supported by China, which other countries (including Venezuela) also use. Thus, cryptocurrency is likely to play an increasingly important role in Iran’s efforts to withstand sanctions and its ability to fund proxy forces across the region.

A Nation Shaped by One of the World’s Harshest Sanctions Regimes

Since the 1979 revolution, Iran’s economy has been repeatedly impacted by international sanctions. These measures aim to restrict Iran’s access to US dollars and US financial institutions, while severing its ties with foreign banks that have correspondent relationships in the US, thereby weakening its ability to conduct trade and international transactions. At times, the economic impact of sanctions has been compounded by shocks from global oil price volatility.

In other instances, US and international sanctions have prompted Iran to make concessions in negotiations aimed at limiting its nuclear capabilities and related developments. However, under conditions of “maximum pressure,” these sanctions have also incentivized the Iranian regime to intensify its sanctions evasion efforts—both to strengthen its bargaining position and to alleviate domestic economic pressure. In recent years, these evasion activities have increasingly incorporated cryptocurrency.

The Iran sanctions timeline shows that under decades of intense sanctions, Iran was gradually “squeezed out” of the traditional financial system and ultimately incorporated cryptocurrency into its national-level toolbox for sanctions evasion, financing, and geopolitical maneuvering. Specifically, following the 1979 Iranian Revolution and hostage crisis, the US imposed the first round of sanctions on Iran, banning oil imports, freezing assets, and imposing trade and travel embargoes; between 1984 and 2005, sanctions were continuously escalated against the backdrop of multiple terrorism-related incidents; from 2006 to 2013, the focus of sanctions shifted to the financial sector to curb Iran’s nuclear program, and Iran was disconnected from the SWIFT system. Sanctions were partially lifted after the 2015 Joint Comprehensive Plan of Action was announced, but in 2018 the US withdrew from the agreement and reimposed all nuclear-related and secondary sanctions. That same year, Iran’s largest decentralized exchange, Nobitex, began operations, and the IRGC Quds Force also began using cryptocurrency to evade US sanctions. In 2019, the US designated the Islamic Revolutionary Guard Corps as a Foreign Terrorist Organization. By June 2025, war broke out between Israel and Iran, and Nobitex and Sepah Bank were hacked, demonstrating how sanctions, the financial system, and crypto infrastructure have become deeply entangled in geopolitical conflict.

To fund its proxy forces and evade sanctions, Iran operates a parallel financial infrastructure consisting of informal money transfer agencies, bank accounts, and shell company networks, aimed at laundering proceeds from oil sales and creating “deniability” regarding the oil’s origin. Where possible, this network intersects with the Western financial system, thereby facilitating Iran’s financial activities globally. For example, media reports indicate that two fintech companies, Paysera and Wise, have unknowingly processed payments for this network. Over the past eight years, Iran has also incorporated cryptocurrency capabilities into this shadow banking system.

Iran’s substantive cryptocurrency activity began in the mid-2010s with the establishment of its first major crypto exchange, Nobitex. By 2023, Nobitex had become Iran’s largest crypto exchange; additionally, Iran has four other sizable exchanges: Wallex.ir, Excoino, Aban Tether, and Bit24.cash. Nobitex is deeply embedded in Iran’s traditional payment ecosystem, supporting real-time deposits, withdrawals, and account verification. It acts as a fully functional financial bridge, enabling users to bypass the international banking system, demonstrating “how cryptocurrency channels can be integrated with domestic banking infrastructure in sanctioned jurisdictions to build resilient, borderless payment systems.”

Iranian citizens (sometimes even including regime insiders) use cryptocurrency to move capital abroad during geopolitical crises. Even when not seeking to move wealth abroad, many Iranians invest in cryptocurrency to hedge against the volatility of the national currency and the overall economy.

Iran’s widespread adoption of cryptocurrency is not surprising: sanctions often drive adoption, especially in regions with high income inequality. In fact, cryptocurrency adoption is influenced by factors like economic instability and infrastructure availability, and adoption rates are typically higher in countries with limited access to traditional financial systems.

Since 2018, Iran has begun using cryptocurrency to evade US sanctions. The Islamic Revolutionary Guard Corps (IRGC) is a key user, leveraging cryptocurrency to fund intelligence activities and its proxy network across the Middle East, as well as supporting foreign intervention operations such as sabotage, property destruction, and potentially even targeted assassinations.

At the national level, regime officials, and the IRGC are using cryptocurrency to evade sanctions and access international markets. According to a blockchain analytics firm, Nobitex and other Iranian exchanges employ “advanced techniques” to move funds and deliberately obfuscate their origin and destination. For example, Iran uses cryptocurrency transactions to pay for imports that cannot be processed through traditional payment systems and to offset revenue losses caused by sanctions. Furthermore, Iran specifically uses cryptocurrency to legitimize import payments, thereby circumventing sanctions and avoiding the use of US dollars.

Beyond directly using cryptocurrency for transactions, Iran leverages its surplus oil and energy resources to power Bitcoin mining, essentially converting energy into crypto assets. Given Iran’s extensive use of cryptocurrency and its connections to international markets via multiple blockchains, this method creates liquidity for Iran—usable for purchasing goods and services or funneling funds to its proxy forces within the “Axis of Resistance.” In fact, it is widely believed that the IRGC has engaged in large-scale Bitcoin mining activities.

Once cryptocurrency is acquired, Iran uses these funds to finance other illicit activities. This includes providing financial support to organizations within the “Axis of Resistance” that serve Iran’s regional hegemonic goals, and potentially using virtual assets to fund overseas influence operations. To date, cryptocurrency transactions originating from the IRGC Quds Force (QF) have flowed to Hezbollah, Hamas, and the Houthis (Ansarallah) as part of its overall financing strategy. Cryptocurrency transactions may also benefit other organizations within the “Axis of Resistance.”

Iran’s turn to cryptocurrency marks the latest phase in its long-standing effort to counter and evade one of the world’s most comprehensive sanctions regimes. Initially a stopgap measure for economic resilience, it has now become a key tool supporting Iran’s broader foreign policy objectives, particularly sustaining its proxy network across the Middle East. As Iran’s crypto financing infrastructure matures and becomes increasingly intertwined with an emerging alternative financial system involving Russia, Venezuela, North Korea, and China, its impact extends far beyond Tehran. Subsequent articles in this series will further explore: how Iran’s proxy forces leverage these financial innovations, the specific methods used to transfer and conceal funds, and the expanding roles of China and Russia in supporting and promoting Iran’s alternative financial architecture.

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