Since the onset of the Middle East conflict, Iran has experienced a significant surge in cryptocurrency transactions. Experts highlight that these digital currencies are being utilized both to bypass sanctions imposed on Iran’s Revolutionary Guards and as a financial refuge for civilians grappling with soaring inflation. This analysis explores the multifaceted role of cryptocurrencies within the country.
Between February 28, marking the first day of Israeli-US airstrikes, and March 2, Iranian exchange platforms witnessed an unusually large outflow exceeding $10 million in cryptocurrencies, data from Chainalysis. By March 5, nearly one-third of these funds had moved to foreign exchanges. While some of this movement reflects citizens seeking to safeguard their savings, the volume strongly indicates involvement by “regime actors,” as noted by Chainalysis analyst Kaitlin Martin. Experts suggest such activity is driven by fears of intensified sanctions or cyberattacks.
In a related incident during the peak of the previous Israel-Iran conflict in June 2025, the major cryptocurrency platform Nobitex suffered a $90 million hack attributed to Israel-linked actors, blockchain security firm TRM Labs.
Chainalysis reports that several digital wallets active during this recent surge are directly connected to the Revolutionary Guards. Cryptocurrency analysts at Elliptic observed that even amid internet outages, some outflows continued, implying that certain individuals maintain access to exchange crypto holdings despite website inaccessibility. The regime’s influence is substantial; last year, wallets tied to the Guards received over $3 billion in cryptocurrencies, accounting for more than half of Iran’s total crypto flows—a proportion that continues to rise.
Cut off from conventional financial systems due to international sanctions, Iran relies on cryptocurrencies as an alternative channel. These digital assets facilitate the sale of embargoed oil and discreetly fund allied armed groups, including Yemen’s Houthi rebels, US authorities. Earlier this year, reports revealed that Iran offered ballistic missiles, drones, and other advanced weaponry for sale using cryptocurrencies. Craig Timm of the anti-money laundering group ACAMS described this as a form of “shadow banking,” emphasizing that cryptocurrencies enable faster, cheaper transfers that are difficult to trace due to regulatory gaps worldwide.
The Revolutionary Guards and Iran’s central bank prefer “stablecoins”—digital currencies pegged to the dollar to minimize volatility. Meanwhile, civilians increasingly turn to bitcoin, the leading cryptocurrency, which can be withdrawn from platforms and stored in personal wallets beyond regime control. This trend was already apparent during the harshly suppressed protests in Iran prior to the conflict. With inflation nearing 50 percent before hostilities began, cryptocurrencies have become a vital “lifeline” for many Iranians facing the collapse of the national currency, analyst Kaitlin Martin.
