Amid the escalating economic collapse and political protests sweeping through Iran, cryptocurrencies are playing a more significant and multifaceted role than commonly recognized. The country's local currency, the Iranian rial, plummeted to an unprecedented level of 1.42 million rials per U.S. dollar in late December 2025, representing a more than 40% depreciation since mid-2025. In this financially tumultuous environment, everyday Iranians struggle to safeguard their wealth and livelihoods, while state actors employ cryptocurrency as a strategic asset to maneuver around international restrictions.
Central to this dynamic is the Islamic Revolutionary Guard Corps (IRGC), which has reportedly transferred close to $1 billion through cryptocurrency exchanges to bypass sanctions imposed by the global community. Cybersecurity and blockchain analysis firm TRM Labs identified two United Kingdom-based cryptocurrency exchanges, Zedcex and Zedxion, as primary facilitators of these IRGC-linked transactions. Between 2023 and early 2025, transactions tied to the IRGC constituted 56% of total trading volume on these exchanges, indicating their pivotal role in Iran's crypto ecosystem.
The vast majority of these transactions leveraged Tether's USDT stablecoin operating on the Tron blockchain network. This preference for Tron over other blockchains such as Ethereum underscores competitive factors in the crypto infrastructure space, where lower transaction fees and quicker settlement times offer substantial advantages when moving large sums discreetly and efficiently. From 2023 to 2024, transaction volume tied to the IRGC surged dramatically — from a mere $24 million to $619 million — before reaching $410 million during the first months of 2025. TRM Labs’ investigation tracked movements through 187 wallet addresses already sanctioned internationally, highlighting the scale and sophistication of these operations.
Such extensive use of cryptocurrency extends beyond the Iranian military to proxies in the region as well. For instance, investigators discovered a notable $10 million payment flowing from an IRGC wallet to entities supporting Yemen's Houthi rebels. Alongside Hezbollah and Hamas, these groups have collectively engaged in cryptocurrency transactions worth over $2 billion, marking an unprecedented level of adoption at scale among sanctioned organizations and armed actors.
Adding another layer to the evolving landscape, Iranian state agencies are overtly endorsing cryptocurrency payments for the purchase of military hardware. Promotional content released by the Ministry of Defence Export Center (Mindex) details offers of ballistic missiles, unmanned aerial vehicles, and naval warships payable via digital currencies. Mindex claims to maintain export relationships with 35 countries, though details about these partners remain confidential. Security analysts observing this trend emphasize that it is extraordinarily rare for any sovereign nation to openly advertise accepting cryptocurrency for strategic military assets, signifying Iran’s pioneering yet controversial approach to integrating cryptocurrencies into military commerce.
These developments carry significant implications for the broader cryptocurrency market and industry narratives. The Iranian context powerfully illustrates Bitcoin’s core value proposition as censorship-resistant currency, capable of retaining utility amid economic collapse and government restrictions. Yet, it simultaneously underscores crucial vulnerabilities, notably the dependence on internet infrastructure that can be severed by authoritarian regimes aiming to limit communication and financial flows.
The IRGC's $1 billion crypto channel exemplifies how digital assets are transitioning from fringe speculative vehicles into pragmatic instruments of statecraft and geopolitical maneuvering. The prevalent use of USDT on Tron manifests the competitive pressures faced by networks such as Ethereum, signaling that alternative blockchains with cost-effective and rapid settlement capabilities may emerge as preferred conduits under restrictive conditions. This diversification within the crypto ecosystem poses challenges to Ethereum’s dominance in decentralized finance (DeFi) and raises questions about the future fragmentation of blockchain usage.
In this regulatory and security context, Ripple's XRP token stands out for its design oriented toward compliance and efficient cross-border payments. Its structure may render it less appealing to sanctioned entities while still providing a regulatory-friendly platform for legitimate international transactions, positioning XRP uniquely amid competing blockchain protocols.
Beyond the financial domain, the political uncertainty in Iran adds further complexity. Market participants show notable interest in the country's leadership trajectory, with Polymarket traders estimating approximately a 17% likelihood that Supreme Leader Ayatollah Khamenei will be removed from power by the end of January. Trading volume on this prediction market reached $4.7 million in a four-day window, capturing considerable investor attention amid turbulent events.
Collectively, these developments highlight cryptocurrency's rising prominence and multifarious roles within Iran's ongoing socio-economic crisis and geopolitical positioning. From enabling sanctioned actors to circumvent global restrictions to facilitating state-sanctioned military sales, digital currencies are shaping a new chapter in how crypto assets intersect with real-world challenges and global politics.