Resistance money: Crypto benefited Iran's insiders, then protestors

Before resorting to violence, the Iranian government’s last-ditch attempt to stem the tide of mass protest was a less-dramatic but more telling gambit: appointing a new central banker. 

It was worth a try. The unrest that started at the Grand Bazaar was about money — specifically, the access to hard money. So who better to address it than a central banker?

Unfortunately, protestors knew the money problem was too far gone: Iran’s system of multi-tiered exchange rates and preferential access to hard currency has made the Iranian rial essentially worthless.

In dollar terms, its value now rounds to zero:

A decade of sanctions and monetary mismanagement have starved the country of hard currency, draining the rial of all value. 

For much of that time, Supreme Leader Ali Khamenei has promoted the idea of a “resistance economy” — a doctrine of self-sufficiency and “economic Jihad” that would make Iran “invulnerable” to sanctions by cutting ties to Western finance and the US dollar.

What this became, however, was an economy of corruption in which the elites and insiders who had access to hard currency became wealthy, while the rest of the country — with access only to the rial — became increasingly impoverished.

(Because everything is relative, the US dollar is considered a hard currency in Iran.)

In principle, the government’s system of multi-tiered exchange rates is intended to keep life in Iran affordable by allocating the country’s limited access to hard currency (from oil sales, mostly) to imports of essential goods like medicine and food.

In practice, it became a tool for institutionalized looting. For years, the IRGC and other state-affiliated actors have monopolized the allocation of subsidized currency, allowing the regime’s inner circle to insulate itself from the sanctions it publicly decries.

The government recently acknowledged this reality: “Anyone who received the 28,500-toman dollar pocketed it,” President Pezeshkian said, in reference to the preferential exchange rate, “so we will not give it out anymore.” 

(One toman equals 10 rials, and the free-market exchange rate is something like 1.39 million rials to a dollar.)

Often, however, the hard-currency proceeds from oil exports are not converted to rials at all, because they never make it into the country: Since 2018, $116 billion of export revenue has reportedly gone missing.

The government may have diverted some of this money to the IRGC to pursue its foreign policy goals. 

Much of it, however, is unaccounted for. 

To circumvent US sanctions, the Iranian government moves the dollars it receives in return for oil exports through an intermediary network of “Trustees” who still have access to the US banking system.

Sometimes the Trustees profit by collecting interest on the dollars before passing them on to the government. 

Sometimes the Trustees only pretend to pass the dollars on. “They submit fake SWIFT messages or fabricated banking documents to the Ministry of Petroleum and the Central Bank,” an Iranian journalist explains, “making it appear as though the money has been received.” 

“In practice,” she adds, “much of the foreign currency earned from exports exists only on paper.” 

And on Instagram. The social media account Rich Kids of Tehran has documented the lavish lifestyles of the few Iranians who have benefited from the multi-tiered exchange system.

Sanctions have made hard currency scarce in Iran, but the proliferation of luxury sportscars on the streets of Tehran — cars that can only have been bought with hard currency — suggests the government’s uneven distribution of hard currency has made regime insiders richer than ever. 

Tellingly, the government has attempted to extend this multi-tiered system to a new form of hard money: cryptocurrency.

The IRGC has enthusiastically embraced stablecoins, for example, using them to move oil revenue outside the US banking system. It has used stablecoins (USDT, mostly) for everything from purchasing drone components from China to paying spies in Israel.

The IRGC has moved quite a lot of crypto. Onchain addresses associated with the IRGC received at least $2 billion in 2024 and $3 billion in 2025, Chainalysis estimates. (That is a lower-bound estimate, as it includes only the addresses that have been targeted for sanctions.)

At the same time, however, the government has attempted to severely limit the usage of cryptocurrency by everyone else in the country.

In September, with the rial crashing, the government imposed limits on individuals’ use of stablecoins, capping annual purchases at $5,000 per person and total holdings at $10,000.

Previously, the Central Bank of Iran prohibited all off-exchange trading in cryptocurrencies — no crypto, it says, should be exchanged without the government’s authorization.

That is not how it works, of course. The whole point of crypto is that off-exchange trading cannot be prohibited. 

Iranians know this better than most. Just as crypto enables the Iranian government to move dollars against the wishes of the US government, the Iranian people have been moving crypto against the wishes of the Iranian government. 

“During the recent mass protests,” Chainalysis finds, “Iranians have significantly increased withdrawals of Bitcoin to personal wallets.”

Many of those bitcoin were made in Iran. 

Bitcoin mining accounts for “around 5% of total electricity consumption,” a government official said last year, and “up to 20% of the current power deficit.” 

That mining is illegal, which makes it especially valuable — it produces a kind of hard currency that’s exempt from the corrupt system of multi-tier exchange rates.

“For many Iranians,” Chainalysis concludes, “cryptocurrency has become an element of resistance.”

Resistance money to escape the resistance economy — no central banker needed.

— Byron Gilliam

_{Brought to you by:}

Institutions and DeFi are converging on Canton, creating real-world finance with crypto-style speed.

The latest The Tie report shows growing demand for privacy, composability, and sustainable tokenomics.

With 575+ validators and 600K+ daily transactions driving on-chain activity, Canton’s network momentum is accelerating on-chain global finance.

Crypto's premier institutional event is returning to NYC this coming March 24-26.

Get your ticket today with promo code: BREAKDOWNNL for $100 off.