This is how Iran uses Bitcoin to evade sanctions and finance its regional proxies

Source: Yellow Original Title: Iran Uses Bitcoin to Evade Sanctions and Fund Regional Proxy Networks

Original Link: Iran’s cryptocurrency ecosystem expanded to nearly $7.8 billion in activity by 2025, according to a new Chainalysis report, highlighting how digital assets are increasingly integrated into the country’s economic and political landscape amid sanctions, conflict, and internal unrest.

The report finds that cryptocurrency activity in Iran closely follows major geopolitical and internal events, with on-chain data showing sharp spikes during military escalations, cyberattacks, and nationwide protests.

Analysts note that the trend demonstrates the changing role of cryptocurrencies both as a state-level financial tool and as a civil alternative to a rapidly depreciating national currency.

IRGC accounts for approximately half of Iran’s crypto activity

One of the most significant findings of the report is the growing dominance of the Islamic Revolutionary Guard Corps within Iran’s cryptocurrency economy.

Chainalysis estimates that addresses linked to networks associated with the IRGC accounted for approximately 50% of all Iranian crypto activity in Q4 2025.

Funds received by wallets associated with the IRGC exceeded $3 billion in 2025, compared to over $2 billion the previous year, reflecting what the report describes as the increasing use of digital assets by the group to finance operations, move funds across borders, and support regional proxy networks.

The figures are described as conservative estimates, based solely on publicly identified wallets linked to sanctions designations.

These findings reflect the broader influence of the IRGC on Iran’s economy, where it maintains control over large segments of energy, infrastructure, and trade.

Crypto activity surges during conflicts and political shocks

Chainalysis data shows that Iran’s crypto activity spiked during several major events, including missile attacks involving Israel, cyberattacks targeting Iranian financial institutions, and periods of heightened regional conflict in 2024 and 2025.

The report also notes a marked increase in crypto transactions during mass protest movements and internet shutdowns imposed by the government, suggesting that blockchain activity has become a measurable indicator of political and economic stress within the country.

Analysts point out that this correlation positions blockchain data as a real-time barometer of geopolitical instability, offering insights that traditional economic indicators often only capture with delay.

Bitcoin withdrawals increase as Iranians seek financial refuge

While state-linked actors have expanded the strategic use of crypto, the report highlights a parallel trend among civilians: a sharp increase in Bitcoin withdrawals from Iranian exchanges to self-custody wallets during periods of unrest.

Between late December 2025 and early January 2026, Chainalysis observed a significant rise in both the number and value of transfers to personal Bitcoin wallets compared to the weeks before mass protests and internet disruptions.

This behavior suggests a flight to self-custody as Iranians seek protection against capital controls, currency collapse, and financial surveillance.

The Iranian rial has lost approximately 90% of its value since 2018, with an estimated inflation rate between 40% and 50%.

In this environment, the report notes, Bitcoin’s portability and censorship resistance have made it an increasingly attractive option for capital preservation.

Blockchain data emerges as a tool for geopolitical intelligence

Chainalysis stated that cryptocurrency in Iran now functions as a dual-use financial system, supporting both sanctioned state actors and ordinary citizens navigating economic instability.

The firm argues that the ability to observe these on-chain dynamics provides governments, regulators, and financial institutions with new tools to assess the effectiveness of sanctions, capital flight, and political risk almost in real time.

As international pressure on Iran continues and internal volatility persists, the report suggests that cryptocurrencies will remain a crucial and contested component of the country’s financial infrastructure.