Cryptocurrency flows to sanctioned entities surged to $154 billion in 2025, up from $59 billion in 2024, according to Chainalysis — a jump that is narrowing the reach of US-led sanctions on Iran. The rise reflects a broader shift away from dollar-centred banking toward payments in cryptocurrencies and renminbi and increased use of informal transfer networks.

Sanctions under strain

For decades, sanctions have been a central tool of Western foreign policy. They aim to choke off revenue streams to targeted states by cutting access to global banks and dollar payments. Scholars have long warned that sanctions often fail to change governments' behaviour and instead harm civilians. Recent events around Iran show those warnings are translating into altered behaviour on the ground.

What used to be a largely dollar-denominated, bank-centred global payment system is fracturing. The US relies on the dollar’s dominance to make sanctions stick: if targets can’t clear payments in dollars through the global banking system, trade is blocked. That's how financial pressure normally translates into political pressure.

Now, a widening set of workarounds is getting traction. These alternative channels existed before 2025, but the conflict involving the US and Israel and Tehran’s responses have pushed more actors to use them.

Crypto and renminbi: new payment routes

Those figures from Chainalysis underscore a dramatic shift in how sanctioned actors collect and move funds without relying on the dollar-based banking system.

Mastheads

Cryptocurrencies offer two features that make them attractive: they can move value across borders quickly, and some tokens are decentralised, meaning no single issuer can freeze funds. Iran has increasingly relied on crypto to receive and convert payments.

Iran then converts cryptocurrency into renminbi and other currencies, using those proceeds to buy goods and services in Asian markets.

China’s currency plays a growing role. A larger share of China's external trade is being settled in renminbi, which makes it easier for Iranian merchants — and states dealing with Tehran — to settle purchases without touching dollars.

Maritime pressure and tolls

The recent fighting has also spilled into maritime trade routes. Iran’s control over parts of the Strait of Hormuz — a narrow channel that carries a significant portion of the world's oil and liquefied natural gas — gave Tehran leverage over tanker traffic. Some reports say Iran demanded transit payments in Bitcoin or renminbi for certain vessels, and some accepted those terms.

Even modest tolls on loaded tankers would generate revenue if collected on a portion of cargo, and paying with Bitcoin or renminbi moves revenue outside the dollar payments system, limiting what sanctions can block.

Informal networks, barter and the limits of financial pressure

Cryptocurrency and renminbi are only parts of a wider set of alternatives. Barter deals and informal transfer systems such as hawala also let sanctioned parties move goods and value without passing through formal banks. These channels are harder for the US to police because they rely on personal ties, cash flows and local marketplaces instead of international clearinghouses.

Those mechanisms had been growing for years; the war has made them more attractive to companies and states that fear secondary sanctions or disruption to dollar clearing routes. When formal channels become risky, traders turn to informal alternatives such as:

  • direct barter arrangements and countertrade
  • informal money transfer systems (for example, hawala-style networks)
  • settlements in non-dollar currencies such as renminbi
  • use of cryptocurrencies to move and convert value

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Chainalysis found crypto flows to sanctioned entities reached $154 billion in 2025 — a marker of how alternative payment methods are narrowing the reach of financial penalties on Iran.

This article was created with AI assistance.