KATHMANDU: Since the outbreak of the West Asia conflict, Iran has seen a massive surge in cryptocurrency activity, with digital assets being used to bypass sanctions and as a hedge against soaring inflation.
Data from analytics firm Chainalysis shows that over $10 million worth of cryptocurrencies exited Iranian exchanges between February 28—the first day of Israeli-US airstrikes—and March 2. By March 5, nearly one-third of these funds had moved to foreign exchanges.
“While some outflows are driven by citizens protecting their savings, the scale indicates involvement of regime actors,” said Kaitlin Martin of Chainalysis. Experts suggest such transfers may be motivated by fears of additional sanctions or cyberattacks.
Iran has a history of crypto-related vulnerabilities. In June 2025, hackers linked to Israel reportedly stole $90 million from Nobitex, a leading Iranian cryptocurrency platform, according to TRM Labs.
Several wallets involved in the recent surge are linked directly to the Revolutionary Guards. Analysts from Elliptic noted that even during internet outages, some outflows continued, indicating access to exchange holdings despite platform disruptions. Last year, wallets associated with the Guards received over $3 billion in cryptocurrencies, accounting for more than half of Iran’s crypto flows, Chainalysis reported.
For a country largely cut off from the global banking system due to sanctions, cryptocurrencies offer an alternative channel. They allow Iran to sell embargoed oil or discreetly fund allied armed groups, including Houthi rebels in Yemen, according to US authorities. Earlier this year, the Financial Times reported Iran offered missiles, drones, and other weapons for sale using digital currencies.
Analysts describe this system as a form of “shadow banking.” “Cryptocurrencies are faster, cheaper than bank transfers, and difficult to trace due to regulatory gaps,” said Craig Timm of ACAMS, an anti-money laundering organisation.
The Revolutionary Guards and Iran’s central bank prefer “stablecoins” pegged to the dollar to reduce volatility, while civilians increasingly rely on bitcoin, which can be stored in personal wallets beyond authorities’ reach. Bitcoin currently trades above $68,000.
“Cryptocurrencies are a lifeline for Iranians facing near-50% inflation and the collapse of the national currency,” Martin added.
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