Iran Turns to Digital Currencies Amid US Sanctions and Strait of Hormuz Blockade

Iran is increasingly utilizing digital currencies, including Tether and Bitcoin, to circumvent U.S. sanctions and maintain international trade, according to a Financial Times report. The Central Bank of Iran has been quietly encouraging exporters to repatriate their earnings through any means necessary, with businesses now commonly using cryptocurrencies to settle cross-border transactions via local crypto exchanges. This shift allows Iranian businesses to bypass the official currency system, which previously required exporters to sell foreign currency at significantly lower official exchange rates.

The move comes as Iran faces heightened economic pressure and renewed naval escalation around the Strait of Hormuz. The U.S. Treasury has warned that Iran is increasingly using digital currencies to evade sanctions and has threatened action against those facilitating such transactions. In April, Tether froze $344 million in assets linked to Iran's central bank.

Despite these efforts, the effectiveness of digital currencies in meeting Iran's economic needs is questionable. While an estimated $10 billion in digital currencies flowed through Iran in 2025 and Bitcoin mining contributes hundreds of millions of dollars annually, allowing Iran to acquire digital assets to bypass sanctions, this avenue is also under U.S. pressure. The U.S. Navy recently destroyed five Iranian tankers in response to attempted attacks on U.S. warships, while Iran claimed to have attacked ten vessels in the Strait of Hormuz.

The broader economic situation in Iran is dire, with annual inflation reaching approximately 66% and the Rial losing significant value. The U.S.-imposed blockade has severely impacted oil exports, a crucial source of foreign currency. While President Trump declared the Strait of Hormuz open, shipping data indicates a drastic reduction in traffic, with only six cargo ships passing through recently compared to around 125 daily before the conflict.

In parallel with its embrace of digital currencies, Tehran is intensifying its crackdown on individuals and companies accused of holding undeclared earnings. Over 20,000 individuals and companies are reportedly being investigated for failing to return approximately 94 billion euros in earnings, including state-owned oil and gas companies. The judiciary has also arrested 22 individuals linked to oil traders.