Iran’s Government Hits Out at Crypto as Currency Freefalls

The economic storm battering Iran has reached a new breaking point — and once again, the government is pointing a finger at cryptocurrency. Iran’s government hits out at crypto with a fresh wave of restrictions, even as the Iranian rial continues its alarming freefall against major world currencies. As the rial breached 1.5 million to the US dollar in early 2026 — compared to roughly 892,000 just a year prior — Tehran has responded not by addressing root causes such as mismanagement and crushing Western sanctions, but by targeting the very digital tools millions of Iranians rely on to protect their savings. The Central Bank of Iran (CBI) has shut down payment gateways, capped crypto holdings, and rolled out an aggressive oversight framework in a move that critics say will only deepen the country’s financial wounds while driving activity underground.

Why Iran’s Government Is Hitting Out at Crypto Again

The pattern is not new, but the intensity has escalated significantly. Each time Iran’s economy enters a fresh spiral, the government’s default response has increasingly included a crackdown on cryptocurrency exchanges and digital asset activity. In early 2025, the CBI ordered the closure of rial payment gateways for all domestic crypto exchanges — a sweeping directive that froze the ability of ordinary citizens to convert their rapidly depreciating rials into stable digital assets like USDT or Bitcoin.

The official justification from the Central Bank centered on financial transparency, currency stabilization, and controlling what it termed illegal activity within digital markets. Iran’s President Masoud Pezeshkian wrote to CBI Governor Mohammad Reza Farzin, formally designating the bank as the sole authority over the ramzpol (cryptocurrency) market — controlling licensing, oversight, and all regulatory directives. Yet industry insiders and exchange operators told journalists a very different story. Rather than stabilizing the economy, these moves were widely seen as deflection — an attempt to control capital flows and shift blame for structural economic failures onto a convenient scapegoat.

Ubitex CEO Eisa Keshavarz was among those who spoke out. He described the CBI’s approach as “businesslike, unethical and biased,” noting that the establishment blocks foreign social media to push Iranians toward local platforms, yet simultaneously restricts local crypto exchanges — effectively forcing users toward unregulated foreign platforms. Repeated warnings from industry stakeholders and media about the damaging consequences of these moves were, in his words, entirely ignored.

The Freefall of the Iranian Rial: What’s Really Behind the Crisis

To understand why Iran’s government keeps hitting out at crypto, it is essential to examine the deeper structural crisis driving ordinary Iranians toward digital assets in the first place. The Iranian rial currency collapse did not happen overnight, and cryptocurrency is not its cause.

Iran’s economy has been crippled by decades of international sanctions, most notably those imposed and then reimposed by the United States. In February 2025, the Trump administration reintroduced the National Security Presidential Memorandum (NSPM-2), ratcheting up what it called a “maximum pressure” campaign. This targeted Iran’s oil exports — the regime’s primary source of revenue — forcing Iran to sell crude at steep discounts almost exclusively to China, which now accounts for roughly 90% of its oil purchases.

Domestically, the Islamic Revolutionary Guard Corps (IRGC) received a 24% budget increase in 2025 even as public services collapsed and rolling energy blackouts hit homes and businesses. Official inflation reached 42.5% in December 2025. The government’s budget for 2026 projected a nominal 5% growth figure that bore no relationship to actual living costs. Public-sector wages rose just 20% annually — a fraction of the rate of real price increases. The result was a predictable and devastating erosion of purchasing power, with basic goods like food and medicine surging in price.

The rial, which traded at 892,000 per dollar in February 2025, had plunged to approximately 1.5 million per dollar by January 2026. Protests erupted across cities including Tehran, Isfahan, and Shiraz. Merchants at Tehran’s Grand Bazaar — historically among the regime’s strongest supporters — openly turned against clerical leadership as the collapse in the rial made it impossible to price inventory or plan purchases. The government responded to protests with a nationwide communications blackout, and some citizens resorted to banned Starlink satellite internet to stay connected.

How the Central Bank of Iran Is Cracking Down on Crypto

The CBI’s regulatory assault on cryptocurrency in Iran has taken several forms simultaneously, creating a layered system of restrictions designed to limit how much capital can exit the rial-based economy through digital channels.

The most significant early measure was the abrupt shutdown of rial payment gateways to crypto exchanges in January 2025. This blocked the primary on-ramp through which Iranians could legally purchase Bitcoin, Ethereum, or stablecoins using their local bank accounts. Without gateway access, users were pushed either toward foreign platforms or toward informal peer-to-peer markets — both of which operate well outside regulatory oversight.

The CBI then moved to impose explicit caps on individual crypto holdings. Under new regulations, annual stablecoin purchases are capped at $5,000, with a maximum holding limit of $10,000. These limits represent a clear attempt to combat what regulators internally called “digital dollarization” — the trend of Iranians abandoning the rial in favor of dollar-pegged tokens as a way to preserve wealth. An anti-speculation tax framework covering gold, jewelry, foreign currency, and digital assets was also introduced, raising the cost of traditional inflation hedges and signaling that the government views household portfolio diversification as a macroeconomic threat rather than a rational response to monetary failure.

For those who can still access the network — a challenge amplified by internet blackouts — the government also established a government-controlled API through which all fiat-to-crypto transactions must be processed, effectively placing state eyes on every trade. Crypto platforms can now obtain direct payment gateways, but only within a regulatory framework that mandates full transparency and routing through designated CBI-approved accounts.

Iran’s Government Hits Out at Crypto While the IRGC Dominates Digital Assets

Perhaps the most striking contradiction within Iran’s crypto crackdown is the parallel reality operating at the state level. While the government restricts ordinary Iranians from accessing digital assets, blockchain analytics firm Chainalysis has documented an extraordinary expansion of IRGC-linked cryptocurrency activity.

According to Chainalysis data, IRGC-associated wallet addresses accounted for over 50% of all crypto value received in Iran during the fourth quarter of 2025. In dollar terms, IRGC-linked transactions reached over $3 billion in 2025, up from roughly $2 billion in 2024. Iran’s total crypto ecosystem surpassed $7.78 billion in 2025, growing at a faster pace than the prior year even as citizen access was being squeezed.

This dual reality — state actors aggressively deploying crypto to evade sanctions and fund activities, while citizens face increasingly severe restrictions on the same tools — highlights a defining contradiction of Iran’s approach to digital currency regulation. The government is not cracking down on crypto because it views the technology as inherently harmful. It is cracking down because it wants to monopolize crypto’s power for state use, while preventing the kind of capital flight that threatens the rial’s already paper-thin credibility.

Israel’s National Bureau for Counter Terror Financing has published a seizure order listing 187 crypto addresses holding roughly $1.5 billion in Tether. Separate findings by blockchain compliance firm Elliptic linked Iran’s central bank itself to at least $507 million in USDT purchases. Iranian crypto outflows reached $4.18 billion in 2024 — a 70% increase year on year — driven largely by state-linked entities even as the CBI restricts citizens.

Ordinary Iranians Turn to Bitcoin Despite the Crackdown

Against this backdrop of government restriction, ordinary Iranians continue to seek out Bitcoin and cryptocurrency as a financial lifeline. Approximately 22% of Iran’s population — around 10 million people — had adopted some form of cryptocurrency by early 2026, according to available estimates, despite all the official obstacles. During the December 2025 protests, Chainalysis observed a significant surge in withdrawals from Iranian exchanges to unattributed personal Bitcoin wallets, a behavioral pattern consistent with citizens seeking to protect savings from both currency collapse and potential state seizure.

The appeal of Bitcoin as a hedge against inflation in Iran’s context is rational. Unlike the rial, Bitcoin cannot be printed by the government or devalued by political decisions. It can, in theory, be transferred across borders and held without relying on a banking system that has been largely cut off from the global payments network for years. That said, Bitcoin’s utility in Iran faces real-world limitations. The government’s internet blackouts, combined with criminalization of tools like Starlink, make network access itself an unreliable resource. Exchange closures and payment gateway shutdowns further narrow the options available to ordinary citizens.

The World Bank has projected that Iran’s economy will contract in 2026 amid continued high inflation and currency pressure, a baseline forecast that suggests the current crisis is far from a temporary disruption. As the rial’s purchasing power evaporates and formal alternatives disappear, the informal crypto market in Iran is likely to grow — driven underground but not eliminated.

Is Crypto a Scapegoat for Iran’s Economic Failures?

The case that Iran’s government is using crypto as a scapegoat for deeper structural failures is compelling and widely made by economists and industry observers. The rial has been depreciating for decades. In 1933, one US dollar was worth 11.2 rials. By 2025, that figure had become several hundred thousand rials. Cryptocurrency did not exist for most of that collapse. What cryptocurrency has done is give citizens a means to respond to those failures — and that response, rather than the failures themselves, appears to be what the government finds threatening.

Economic stakeholders within Iran have consistently warned the CBI that its confrontational approach will not control the currency market. Instead, they argue, it will expand underground markets, drive users to unregulated foreign platforms, and deepen the very instability the government claims to be addressing. A cooperative framework — one that regulates domestic exchanges rather than shutting them down — would better serve both the government’s oversight goals and citizens’ legitimate financial needs.

What Comes Next: Iran’s Crypto and Currency Outlook

The “maximum pressure” sanctions regime shows no sign of easing. Domestic political instability has intensified since the December 2025 protests. The IRGC continues to deepen its dominance over both the economy and crypto infrastructure. And ordinary Iranians, squeezed between a collapsing rial and a hostile regulatory environment, will continue seeking whatever tools remain available to protect their financial lives.

Global compliance programs are simultaneously closing off some of those avenues. Exchange exposure to Iranian services has declined by roughly 23% between 2022 and 2024 as international platforms have improved their sanctions screening. This tightening of legitimate access may, paradoxically, push more activity toward the very illicit and unregulated channels that regulators claim to be fighting.

For the broader crypto world, Iran’s situation serves as a stark illustration of both cryptocurrency’s potential as a financial lifeline in crisis conditions and the real limits that state power can impose on that potential. Censorship resistance at the protocol level means little if users cannot access the internet, face criminal penalties for participation, and watch local exchanges shut down one by one.

Conclusion

Iran’s government hits out at crypto with increasing force even as the Iranian rial continues its historic decline — but the evidence strongly suggests this approach will deepen rather than resolve the country’s financial crisis. Restricting digital assets does not address inflation, sanctions, mismanagement, or the crisis of monetary trust that is driving millions of Iranians toward Bitcoin and stablecoins. It simply makes legitimate, transparent participation harder while pushing activity further underground.

If you are tracking the intersection of cryptocurrency regulation and economic instability in sanctioned economies, Iran’s story is essential reading. The government’s crackdown reveals what happens when a state fears the tool more than it fears the disease. Follow this space closely — because the outcome in Iran will shape how governments worldwide think about crypto regulation in currency crises for years to come. Share this article, explore the data, and stay informed about how digital assets are transforming financial survival in the world’s most economically pressured nations.

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