Forty Years After Sanctions, How Iran Is Reclaiming Its Financial Channel Through Crypto
Original Title: The Axis of Illicit Finance: Iran's Crypto Strategy Explained
Original Author: Jessica Davis, Insight
Translation: Peggy, BlockBeats
Editor's Note: Under more than forty years of high-intensity sanction pressure, Iran has gradually been squeezed out of the global financial network centered around the US dollar and traditional banking system. This article takes a timeline as a clue, outlines Iran's evolution from oil embargo, financial disconnection to the introduction of cryptocurrency, illustrating how sanctions objectively drive a restricted state to build a parallel financial system.
In Iran, cryptocurrency is no longer just a technical choice but has been incorporated into a national-level toolbox for sanction evasion and geopolitical gamesmanship. As this system intertwines with a broader alternative financial network, its impact has transcended Iran itself, pointing to profound changes in sanctions mechanisms, the global financial order, and the evolving security landscape.
Below is the original article:
This article marks the beginning of an eight-part series aimed at examining how Iran is increasingly relying on cryptocurrency to evade international sanctions. These changes are taking place against a backdrop of high volatility: Iran's standoff with Israel in 2025, the continued activities of its regional proxy network, and a wave of protests triggered by corruption, economic distress (exacerbated by sanctions), and political repression.
Understanding how and why Iran has incorporated cryptocurrency into its sanction evasion strategy is crucial for assessing how it will respond to countermeasures in the future and the impact this will have on global security.
Iran's cryptocurrency activities are also part of a larger narrative. I refer to it as the "Axis of Illicit Finance": an emerging alternative financial system involving other sanctioned or Western-opposed countries, such as Russia, Venezuela, and the Democratic People's Republic of Korea (DPRK), with China playing a key supporting role.
In the upcoming series of articles, I will gradually dissect how this system operates, who benefits from it, and why it is more worthy of attention now than ever before.
Iran's Sanctions Background
For a long time, Iran has adopted a highly adaptive financial strategy to mitigate the impact of international sanctions and continue to support its regional proxy organizations. These means include shadow shipping fleets, currency service providers and shell company networks, as well as cash couriers, etc. As sanctions have increasingly squeezed its access to the formal financial system, Iran and its affiliates are increasingly relying on cryptocurrency to circumvent regulations, channeling funds to the "Axis of Resistance," which includes Hezbollah, Hamas, Ansarallah, and Iraqi militia groups.
While Iran's cryptocurrency-based financial infrastructure is still in its early stages of development, its complexity and scope are continually increasing, gradually integrating the traditional financial system with emerging digital mechanisms. At the same time, this system is increasingly embedded in an alternative financial system shaped by Russia and North Korea (DPRK) and supported by China, with other countries (including Venezuela) also using this system. Therefore, cryptocurrency is likely to play an increasingly important role in Iran's efforts to withstand sanctions and its ability to provide funding support to proxy forces across the region.
A Nation Shaped in One of the World's Most Stringent Sanction Regimes
Since the 1979 revolution, the Iranian economy has repeatedly felt the impact of international sanctions. These measures aimed to restrict Iran's access to the US dollar and American financial institutions, while cutting off its ties with foreign banks having correspondent relationships in the United States, thereby weakening its ability to engage in trade and international transactions. At certain times, the economic effects of sanctions were compounded by global oil price fluctuations.
In other instances, US and international sanctions prompted Iran to make concessions in negotiations aimed at limiting its nuclear capabilities and related developments. However, under the conditions of "maximum pressure," these sanctions also spurred the Iranian regime to intensify efforts to evade sanctions — both to enhance its negotiation leverage and to alleviate domestic economic pressure. In recent years, these evasion activities have increasingly incorporated cryptocurrency.
An Iran sanctions timeline shows that under decades of high-intensity sanctions, Iran gradually got "squeezed out" of the traditional financial system and eventually incorporated cryptocurrency into its national-level toolkit for sanctions evasion, financing, and geopolitical gaming. Specifically, following the 1979 Iranian Revolution and hostage crisis, the US imposed initial sanctions on Iran, prohibiting oil imports, freezing assets, and imposing trade and travel bans; from 1984 to 2005, sanctions escalated in the context of multiple terrorism-related events; from 2006 to 2013, sanctions shifted focus to the financial sector to curb Iran's nuclear program, disconnecting Iran from the SWIFT system. Following the announcement of the 2015 Joint Comprehensive Plan of Action, sanctions were briefly partially lifted, but in 2018, the US withdrew from the agreement, reimposing all nuclear-related and secondary sanctions. In the same year, Iran's largest decentralized exchange, Nobitex, began operations, and the Islamic Revolutionary Guard Corps' Qods Force started evading US sanctions through cryptocurrency. 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, Nobitex and Sepah Bank were targeted in cyber attacks, demonstrating the deep involvement of sanctions, financial systems, and crypto infrastructure in geopolitical conflicts.
To fund its proxy forces and evade sanctions, Iran operates a parallel financial infrastructure consisting of informal money transfer networks, bank accounts, and shell company networks, aimed at laundering proceeds from oil sales and creating plausible deniability of the origin of oil. When conditions allow, this network intersects with the Western financial system, facilitating Iran's financial activities globally. For example, media reports suggest that two financial technology companies, Paysera and Wise, have unknowingly processed payments for this network. Over the past eight years, Iran has also integrated cryptocurrency capabilities into this shadow banking system.
Iran's meaningful cryptocurrency activity began in the mid-2010s when the country's first major cryptocurrency exchange, Nobitex, was established. By 2023, Nobitex has become Iran's largest cryptocurrency exchange; additionally, Iran has four other major exchanges: Wallex.ir, Excoino, Aban Tether, and Bit24.cash. Nobitex is deeply embedded in Iran's traditional payment ecosystem, supporting real-time fund access and account verification. It serves as a full-fledged financial bridge, allowing users to bypass the international banking system, showcasing "how to integrate cryptocurrency channels with local banking infrastructure in a sanctioned jurisdiction, to build a resilient, cross-border, borderless payment system."
Iranian citizens (sometimes including even regime insiders) use cryptocurrency to move capital out of the country during geopolitical crises. Even when not for capital flight purposes, many Iranian people also invest in cryptocurrency to hedge against currency and overall economic volatility.
Iran's widespread adoption of cryptocurrency is not surprising: sanctions often drive adoption, especially in regions with high levels of income inequality. In fact, cryptocurrency adoption is influenced by factors such as economic instability and infrastructure availability, with higher adoption rates typically seen in countries with limited access to the traditional financial system.
Since 2018, Iran has begun using cryptocurrency to evade U.S. sanctions. The Islamic Revolutionary Guard Corps (IRGC) is among the key users, using cryptocurrency to fund intelligence activities and its proxy network across the Middle East, while also supporting foreign intervention actions, such as sabotage, property destruction, and potentially even targeted assassinations.
At the national level, Iranian regime officials, and the Islamic Revolutionary Guard Corps (IRGC) are using cryptocurrency to evade sanctions and enter the international market. According to a blockchain analysis company, Nobitex and other Iranian exchanges employ "advanced technology" to move funds and deliberately obscure the source and destination of funds. For instance, Iran uses cryptocurrency transactions to pay for imported goods that cannot be processed through the traditional payment system, and to offset financial revenue losses due to sanctions. Additionally, Iran specifically uses cryptocurrency to legitimize import payments to bypass sanctions and avoid using the U.S. dollar.
In addition to using cryptocurrency directly for transactions, Iran also leverages its surplus oil and energy resources to power Bitcoin mining, essentially converting energy into crypto assets. Given Iran's widespread use of cryptocurrency and its connections to the international market through multiple blockchains, this approach has created liquidity for Iran—usable both for purchasing goods and services and for funding proxy forces in its "Axis of Resistance." In fact, it is widely believed that the IRGC has engaged in large-scale Bitcoin mining activities.
Once acquiring cryptocurrency, Iran uses these funds to support other illicit activities. This includes providing financial support to organizations within the "Axis of Resistance" that serve Iran's regional hegemonic objectives, as well as potentially funding overseas influence operations using virtual assets. To date, cryptocurrency transactions from the IRGC's Qods Force have flowed to groups such as Hezbollah, Hamas, and Ansarallah as part of their overall financing strategy. Other organizations within the "Axis of Resistance" may also benefit from cryptocurrency transactions.
Iran's embrace of cryptocurrency signifies a new phase in its long-standing efforts to confront and circumvent one of the world's most comprehensive sanction regimes. Initially a temporary measure to maintain economic resilience, it has now become a key tool to support Iran's broader diplomatic goals, especially in sustaining its proxy network across the Middle East. As Iran's cryptocurrency 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 driving Iran's alternative financial architecture.
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