Since the start of the Middle East conflict, Iran has witnessed a sharp rise in cryptocurrency flows.

Experts say digital currencies are being used both to circumvent sanctions imposed on the Islamic Revolutionary Guard Corps and as a financial safe haven for civilians grappling with soaring inflation.

Millions of dollars

In an unusually large movement, more than $10 million worth of cryptocurrencies left Iranian exchange platforms between February 28—the first day of Israeli-US airstrikes—and March 2, according to data analytics firm Chainalysis.

By March 5, nearly one-third of these funds had been transferred to foreign exchanges.

While some of this outflow may be attributed to citizens seeking to protect their savings, the scale of the transfers suggests the involvement of “regime actors,” said Kaitlin Martin of Chainalysis.

Experts noted that such movements are likely driven by fears of additional sanctions or potential cyberattacks.

In June 2025, during a previous escalation between Israel and Iran, leading cryptocurrency platform Nobitex lost $90 million to hackers allegedly linked to Israel, according to blockchain firm TRM Labs.

Regime implicated

Chainalysis reported that several digital wallets involved in the surge are directly linked to the Revolutionary Guards.

Cryptocurrency analytics firm Elliptic noted that outflows continued even during internet outages, suggesting certain actors retained access to exchange-held crypto assets despite disruptions.

The scale of state-linked involvement is significant. Last year, wallets associated with the Guards received over $3 billion in cryptocurrency—more than half of the country’s total crypto flows—a share that continues to grow, according to Chainalysis.

‘Shadow banking’

With Iran largely cut off from the global financial system due to international sanctions, cryptocurrencies have become an alternative channel—enabling the regime to sell embargoed oil or discreetly finance allied groups, such as the Houthi movement, according to US authorities.

The Financial Times earlier reported that Iran had offered ballistic missiles, drones and other advanced weapons systems for sale using cryptocurrencies.

These digital assets form a type of “shadow banking,” said Craig Timm of the anti-money laundering organization ACAMS.

Faster and cheaper than traditional bank transfers, cryptocurrencies are also harder to trace due to regulatory gaps, he added.

‘Lifeline’

Authorities and the Iranian central bank reportedly favor “stablecoins”—digital currencies typically pegged to the US dollar—to reduce volatility.

Meanwhile, civilians are increasingly turning to Bitcoin, which can be withdrawn and stored in private wallets beyond government control.

This trend was already evident during earlier protests in Iran, according to Chainalysis.

In a country where inflation was nearing 50 percent even before the conflict, cryptocurrencies are now serving as a “lifeline” for many Iranians amid the collapse of the national currency, Martin said.