Iran's Revolutionary Guard Used Crypto to Evade Sanctions, Report Finds

Iran’s Revolutionary Guard has been using cryptocurrency to bypass U.S. and international sanctions, according to a report from Chainalysis. The firm’s 2026 crypto crime report found that sanctioned entities, including Iran, are increasingly leveraging digital assets to avoid financial restrictions. This strategy is part of a broader shift toward using crypto as a tool to circumvent traditional banking systems.

Illicit cryptocurrency addresses received at least $154 billion in 2025, a 162% increase from 2024, according to Chainalysis. Much of this growth was driven by large-scale transactions from sanctioned entities, including Iran and Russia. The latter, which faces sanctions due to its invasion of Ukraine, launched the A7A5 token in early 2025 and transacted over $93.3 billion in less than a year.

The report also noted that stablecoins, due to their low volatility and cross-border utility, accounted for 84% of all illicit crypto activity in 2025. This trend mirrors the overall growth of stablecoins in the broader crypto ecosystem, suggesting a parallel development between legal and illicit financial behaviors.

Why Did This Happen?

Ongoing global sanctions have pushed blacklisted entities to adopt alternative financial tools, with crypto emerging as a favored option. The report describes this as a "maturation" of the illicit on-chain ecosystem, where state actors increasingly use digital assets to move money outside traditional financial systems. Iran's economic crisis, exacerbated by sanctions and the 12-day war with Israel, has only intensified these efforts.

The Iranian government's economic troubles were further highlighted by widespread protests in December 2025, which began in Tehran's Grand Bazaar and spread nationwide, according to Sky News. Demonstrators protested over hyperinflation, currency devaluation, and food insecurity. The rial hit 1.4 million to $1, a record low, triggering unrest and government crackdowns.

What Are Analysts Watching Next?

Chainalysis expects illicit crypto activity to continue growing in 2026 as enforcement mechanisms improve and sanctioned entities find more sophisticated ways to exploit the system. The report's authors suggest that as more illicit addresses are identified, the volume of transactions moving through them will likely increase. This could lead to a higher percentage of total crypto transactions being tied to illicit activity.

Analysts are also monitoring how governments respond to these trends. For example, Russia has reportedly considered relaxing some crypto rules to blunt the impact of Western sanctions. This could set a precedent for other sanctioned nations to adopt similar strategies. Meanwhile, Iran's leadership faces both economic collapse and the political risk of continued unrest, as protests show little sign of abating.

What About the Global Sanctions Landscape?

The U.S. has continued to expand its sanctions regime, with over 3,100 entities added to its Specially Designated Nationals and Blocked Persons List in 2024 alone. As the number of sanctioned entities grows, so does the incentive for these groups to find alternative financial tools. The use of crypto represents a significant challenge for policymakers, who must balance the need for financial privacy with the imperative to prevent illicit finance.

The report also highlights the growing complexity of the global sanctions environment. With over 80,000 sanctioned entities worldwide as of May 2025, the risk of non-compliance for financial institutions is higher than ever. This has led to increased scrutiny of cross-border transactions, particularly those involving stablecoins and other assets with high utility in illicit trade.

The future of illicit crypto activity will depend heavily on enforcement efforts and regulatory innovation. While current measures have limited the scale of illicit transactions—still below 1% of total crypto volume— experts caution that this could change as more actors adopt crypto as a sanctions evasion tool.