Iran and Venezuela show how crypto functions simultaneously as a state tool for sanctions evasion and a financial lifeline for citizens.
Cryptocurrency has become an increasingly prominent tool within sanctioned economies, where traditional financial channels are restricted or inaccessible. According to the Terrorism and Sanctions Chapter of the 2026 Crypto Crime Report by Chainalysis, illicit cryptocurrency activity reached at least US$154 billion in 2025, with the surge largely driven by state-linked sanctions evasion. The value received by sanctioned entities alone rose by 694% during the year.
Within this broader trend, Iran and Venezuela illustrate how digital assets can serve both state and civilian purposes. In both countries, crypto has evolved into a parallel financial system operating alongside constrained domestic banking structures.
Iran: Crypto as a Tool of State Strategy
Iran represents one of the clearest examples of cryptocurrency becoming embedded in national financial strategy. The country’s crypto ecosystem reached more than US$7.78 billion in activity during 2025 as geopolitical tensions and economic pressure intensified. Addresses linked to the Islamic Revolutionary Guard Corps (IRGC) played a central role in this system, accounting for more than 50% of the value received by Iranian crypto services in Q4 2025.
Throughout the year, over U$3 billion flowed through IRGC-associated networks. These funds have been linked to a range of activities, including financing regional proxy groups, facilitating oil sales, and procuring dual-use equipment. Blockchain data also revealed evidence of coordinated financial infrastructure involving brokers that purchased stablecoins on behalf of the Central Bank of Iran, with funds routed through decentralised
Iran’s Civilian Crypto Adoption
While the Iranian state increasingly uses crypto for strategic purposes, civilian adoption has followed a different trajectory. Facing inflation estimated between 40% and 50% and continued pressure on the national currency, many Iranians have turned to digital assets as a means of preserving wealth.
During periods of political unrest and internet disruptions in early 2026, on-chain data showed a noticeable increase in withdrawals from Iranian exchanges to personal Bitcoin wallets. This shift toward self-custody suggests that for many individuals, Bitcoin is viewed as a censorship-resistant asset offering financial flexibility outside the domestic banking system.
Venezuela: Crypto as an Economic Lifeline
Venezuela presents a different but equally revealing case. Venezuelan citizens were already adopting digital assets to navigate hyperinflation and persistent instability within the domestic banking sector. In 2025 alone, an estimated US$44.6 billion in cryptocurrency transaction flows were associated with Venezuela.
Attempts by the Venezuelan government to formalise and control crypto adoption through institutions such as the Superintendencia Nacional de Criptoactivos (SUNACRIP) and state-backed exchanges achieved limited success. The government’s flagship crypto project, the Petro, ultimately failed to gain widespread public trust.
Instead, Venezuelans have largely relied on international exchanges, peer-to-peer trading networks, and informal over-the-counter brokers to access the global financial system. These channels provide a vital bridge between Venezuela’s constrained domestic economy and international markets.
A Dual Reality for Crypto Under Sanctions
Both Iran and Venezuela highlight the complex role cryptocurrency now plays in sanctioned environments. In Iran, digital assets have become integrated into state-backed financial operations designed to support geopolitical objectives.
In Venezuela, by contrast, crypto continues to function primarily as a financial lifeline for citizens seeking stability in the face of prolonged economic crisis.
Read the report here.
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