Bitcoin (BTC) is playing a fascinating dual role in Iran's current turmoil. On one side, ordinary citizens are rushing into crypto as their national currency disintegrates. On the other, Iran's Islamic Revolutionary Guard Corps appears to be running a billion-dollar sanctions evasion operation through the same technology.
When Your Currency Loses Half Its Value in Six Months
The Iranian rial hit a record low of 1.42 million per U.S. dollar in late December, having shed over 40% of its value since June 2025. That's the kind of economic collapse that sends people scrambling for alternatives, and Bitcoin has become exactly that for many Iranians.
But while citizens are trying to preserve whatever wealth they have left, the IRGC has been using cryptocurrency for something entirely different: moving money that international sanctions were supposed to freeze.
TRM Labs uncovered two UK-registered exchanges, Zedcex and Zedxion, that became major conduits for IRGC transactions. Between 2023 and 2025, IRGC-linked activity made up 56% of total volume on these platforms. Most transactions used Tether's USDT stablecoin on the Tron (TRX) blockchain.
The numbers tell a striking story: IRGC crypto transactions jumped from $24 million in 2023 to $619 million in 2024, plus another $410 million through early 2025. TRM Labs tracked the money through 187 sanctioned wallet addresses.
In one particularly notable instance, investigators identified a $10 million payment from an IRGC wallet to accounts funding Yemen's Houthi rebels. Add in Hezbollah and Hamas, and these organizations are now using cryptocurrency at scales that would have seemed impossible just a few years ago. Total identified volumes now exceed $2 billion.
Ballistic Missiles, Now Accepting Crypto
Iran has taken things a step further by openly advertising weapons sales with cryptocurrency payment options. According to promotional materials from the Ministry of Defence Export Center (Mindex), Iran is offering ballistic missiles, drones, and warships with crypto payment capabilities.
Mindex claims relationships with 35 countries, though they're keeping those names to themselves. Security analysts point out that it's extraordinarily unusual for a country to openly advertise cryptocurrency payments for strategic military equipment.
What This Means for Crypto Markets
The Iranian situation validates something Bitcoin advocates have argued for years: that it works as censorship-resistant money during currency collapse. But Iran's internet shutdowns expose a critical weakness. Bitcoin needs infrastructure, and authoritarian governments can pull the plug.
The $1 billion IRGC operation shows how far cryptocurrency has come from its fringe origins. It's now a tool of statecraft, for better or worse. The combined volumes from Hezbollah, Hamas, and the Houthis topping $2 billion underscore that transformation.
For Ethereum (ETH), there's an uncomfortable question here. The IRGC chose USDT on Tron rather than Ethereum, likely because of lower fees and faster settlement. When you're moving large sums under sanctions, those details matter. This fragments the crypto ecosystem and challenges Ethereum's DeFi dominance.
Meanwhile, XRP (XRP) might benefit from its compliance-focused design. Regulators could favor a system that's less attractive to sanctioned actors while still offering speed and low costs for legitimate cross-border commerce.
Polymarket traders are assigning about a 17% chance that Khamenei will be removed from power by the end of January, with trading volume spiking to $4.7 million in four days. That's speculation, of course, but it reflects how quickly things are moving on the ground.