The Rails That Don’t Ask Permission

A few months ago, our Chief Economist and Director of Research, Daniel, asked me to write a few words on how crypto and geopolitics have become increasingly entangled.  Now, after those few months have come and gone, an (at least temporary) resolution to active hostilities in Iran is in sight. With the world’s attention on serious conflicts around the world, including in the Middle East, the digital asset sector is witnessing the most consequential test of whether decentralized digital assets can function in the real-world as censorship-resistant financial infrastructure. In observing this, I’m led to make the argument that for populations living under sanctions or economic collapse, Bitcoin and crypto have taken on their most critical role to date. They are becoming the rails of both first, and last, resort.

Given the growing role of digital assets in Iran economy, the recent turmoil in Iran has become of particular interest. Iran sits on some of the largest oil and gas reserves in the world, and any future government will face hard decisions about how those resources are managed and what role capital markets play in reconstruction.  The Western world view has long argued that the benefits of national productivity should trickle down to the people, and so it will be interesting to see if digital assets aid in the efficiency of that wealth transfer once the conflict in Iran concludes.

To understand why crypto has taken root in Iran, consider what financial exclusion realistically looks like at ground level. Iran has been cut off from Visa, Mastercard, and the SWIFT interbank network since 2012, and that was a full decade before Russia's equivalent exclusion in 2022. Despite those restrictions, Russia had already built MIR by 2022, a domestic card network that carried meaningful cross-border reach into roughly a dozen countries, before being eroded by secondary sanctions. Iran's domestic equivalent, Shetab, has essentially no international acceptance, and its only meaningful cross-border link, established in November 2024, is to Russia's equally isolated MIR network. Combined with a rial that has lost more than 96% of its value since sanctions were reimposed in 2018, the result is near-total financial isolation. With little other options, roughly 11–15 million Iranians have responded by turning to crypto as their primary mechanism for dollar-denominated savings and cross-border trade.

Iran legalized Bitcoin mining in August 2019, directing licensed miners to sell mined BTC directly to the Central Bank of Iran. This effectively converted subsidized electricity into a hard currency that began to exist outside the banking system. Since then, Iran's share of the global Bitcoin hashrate has been estimated at 3.8% by the Cambridge Centre for Alternative Finance (2020), 4.5% by Elliptic (2021), and as high as 7% in U.S. Senate correspondence which cited 2021 data. Elliptic co-founder Tom Robinson observed that a 4.5% hashrate share implies roughly a 4.5% probability that any given transaction’s mining fee reaches an Iranian miner. The caveat worth noting is that Iranian miners operating within international pools receive only their proportional share of pool rewards, meaning the direct recipient of the fee is the pool entity rather than Iran itself, which diffuses the sanctionable event. When the June 2025 conflict began, Iran's hashrate fell an estimated 77% quarter-over-quarter as power infrastructure was disrupted, confirming that mining as a sanction's workaround is only as resilient as the grid beneath it.

In June 2025 Nobitex, Iran's largest crypto exchange which at the time processed roughly 87% of domestic volume — was hacked. Rather than stealing funds, the perpetrators deliberately destroyed over $90 million in assets by routing them to cryptographically unspendable wallet addresses as a political statement. Leaked internal code subsequently revealed that Nobitex had built stealth-address generation and dual-track compliance systems specifically designed to defeat blockchain intelligence tools. It was clear that Nobitex had stopped behaving as a simple retail trading platform but had instead transformed into critical financial infrastructure within a sanctioned state.

The bulk of Iran's crypto economy runs not on Bitcoin but on Tether's USDT — a modern form of hawala, the centuries-old informal value transfer system with deep Iranian roots. It’s a system in which a broker accepts funds in one location and coordinates with a counterpart elsewhere to deliver equivalent value, with no physical movement of money and settlement occurring through offsetting transactions. The Central Bank of Iran accumulated at least $507 million in USDT in 2025 alone, before OFAC coordinated with Tether to freeze $344 million on April 24, 2026, the largest on-chain freeze event on record. That single action exposed the fundamental flaw in the regime's strategy; that dollar-pegged stablecoins are not censorship-resistant. They are not truly decentralized. Tether retains a freeze function in the token contract on every chain it operates, meaning that the same tool that granted Iran dollar access could be revoked with one call.

When the conflict began in earnest, oil cracked $100 for the first time since 2022, Hormuz shipping traffic collapsed, and Europe found itself staring down a renewed energy crisis already pushing inflation back up. The kind of macroeconomic dislocation that is, in every sense, a stress-test for capital. For crypto markets, the story was messier than most people want to admit. Bitcoin dropped hard in early June 2025 when strikes began, bounced, dropped again when ceasefire talks stalled, and has broadly traded the news cycle in real time. Through all of it, BTC outperformed equities, and then during the February 2026 escalation, Bitcoin ETFs absorbed institutional inflows while gold funds recorded some of their largest single-day outflows in years, suggesting an early but meaningful shift in how capital perceives BTC under genuine geopolitical stress. These market shifts were all in part a response to the flight of ordinary Iranians and Ukrainians to Bitcoin self-custody. Crypto’s utility of wealth preservation beyond any government's reach has been on full-display.

I think it comes down to this: when cross-border settlement gets complicated, people gravitate toward rails that don't require anyone's approval to use. For the Iranian state, those rails were stablecoins until they were frozen by Tether. For ordinary Iranians, it has been Bitcoin, and that calculation has not changed. Every time geopolitics makes settlement harder, that calculation gets made by more people, in more places, only expanding the use and utility of crypto.

// This article was drafted with research and citations assistance from a Generative AI service.

Keeyan Ravanshid is President of HODL Markets. He has a decade of experience in leading and advising organizations in the fields of data, technology, and finance. He lives in Miami, Florida, although he is a proud Canadian, originally from Montreal, Quebec.