Recent military escalations in Iran, combined with far-reaching international sanctions, have thrown the country’s financial infrastructure into the spotlight. New analysis reveals how Iran’s cryptocurrency markets, particularly stablecoins, have adapted and even thrived under extreme pressure, providing a glimpse into the resilience of this shadow financial system after the US and Israeli airstrikes on February 28.
The Rise of Iran’s Crypto Underground
According to data from analytics firms TRM Labs and Chainalysis, Iran’s total crypto transaction volume reached between $8 and $10 billion by 2025. The country’s largest exchange, Nobitex, now reportedly serves around 15 million users. Meanwhile, blockchain analytics provider Elliptic reported that Iran’s central bank purchased at least $507 million worth of USDT stablecoins last year, pointing to growing efforts to bypass the global banking system through crypto.
Chainalysis estimates that roughly half of this transaction volume passed through wallets linked to the Islamic Revolutionary Guard Corps (IRGC), while TRM Labs places the figure closer to five percent. Still, TRM Labs has tracked over 5,000 wallets associated with the IRGC moving in excess of $3 billion in crypto since 2023. Furthermore, a TRM Labs report published in January noted that two UK-registered firms, Zedcex and Zedxion, transferred $619 million in stablecoins to wallets tied to the IRGC in just the first months of 2024.
“This is not a one-off crypto abuse scenario; it’s a sanctioned military organization systematically leveraging offshore crypto exchange infrastructure,” Ari Redbord, head of policy at TRM Labs, emphasized.
Market Volatility During Conflict
TRM Labs reports that during the February 28 attack, internet connectivity in Iran dropped by 99%, triggering an 80% decline in crypto transaction volumes within days. Many exchanges suspended withdrawals entirely or imposed severe restrictions, with some allowing mass withdrawals only twice a day.
Perhaps the most significant move came from Iran’s central bank, which ordered a temporary halt to the USDT-toman trading pair. The toman serves as the main bridge between cryptocurrencies and government-issued currency in Iran. Amid panic, Iranians rushed to swap their rials for USDT to hedge against the plummeting value of their local currency. This trading pair thus became an instant barometer for the rial’s value. The central bank’s intervention briefly curbed runaway volatility in the digital realm as the official exchange rate spiraled.
When trading resumed, order books remained thin and prices were highly volatile, underlining just how deeply USDT had penetrated Iran’s financial underground. According to TRM Labs, this episode revealed underlying fragility, but also demonstrated that the crypto system itself did not collapse under stress.
Regulatory Scrutiny and Global Risks
In the wake of these tense events, the Financial Action Task Force (FATF) released a new report in early March focusing on stablecoins and anonymous crypto wallets. Citing Chainalysis data, the FATF found that in 2025, 84% of illicit crypto transactions were conducted using stablecoins. The report explicitly identified Iranian actors as utilizing stablecoins to expand financial operations beyond sanctions.
With over 250 stablecoins circulating globally and a combined market capitalization exceeding $300 billion, the FATF called on nations to implement robust regulatory frameworks targeting stablecoin-related risks. The body also warned that many countries had yet to put adequate checks in place given the accelerating scale of stablecoin flows and their abuse.
USDT’s dollar-pegged mechanism provides both a convenient gateway for legal exchanges and a critical workaround for sanctions in places like Iran. Tether’s management insists it maintains a zero-tolerance policy toward illicit activity, but experts note that growing financial pressure is in turn driving up demand for crypto services. As various crises unfold, Iran’s dependence on this digital lifeline is becoming impossible to ignore, particularly when traditional financial routes are severely restricted.
