Crypto Assets have become a new battleground between Israel and Iran, with the crypto market under theocratic rule facing challenges.

The conflict between Iran and Israel has spread to the crypto market.

On June 18, 2025, one of Iran's largest crypto asset exchanges, Nobitex, suffered a major cyber attack. A hacker group calling itself "Murmuration" successfully infiltrated Nobitex's systems, stealing nearly $90 million in assets. The group accused Nobitex of assisting the Iranian government in evading international sanctions and funding illegal activities, transferring the stolen funds to accounts with anti-Iranian messages.

Hackers also issued warnings on social media that these cyber attacks are because Nobitex has become an important tool for the Iranian regime in violating sanctions. Collaborating with infrastructure associated with the Iranian regime puts assets at risk.

This shocking hacker incident not only revealed Iran's massive crypto market, but also made people realize that this country, the only one in the world that practices Islamic theocracy, has deeply integrated with the crypto industry.

Crypto Assets Become a Tool for Sanctions Evasion

Iran's crypto market has developed over the years, and its interest in crypto assets mainly stems from economic and geopolitical pressures. Due to facing harsh international sanctions, Iran's conventional financial channels are restricted, making international trade and fund transfers difficult. In this context, crypto assets are seen as an alternative means.

Analysis indicates that the economic situation in the country is also an important factor driving the development of the crypto market. Iran has long faced high inflation and pressure from currency devaluation, with its national currency, the rial, continuing to weaken. The stock market is highly volatile, forcing many savers to invest their funds into crypto assets to hedge against risks. For ordinary Iranians, crypto assets are seen as a means of preserving value and diversifying assets, especially during times of economic turmoil.

According to an analysis report by a blockchain security company, the total amount of Crypto Assets flowing into major exchanges in Iran in 2022 was close to $3 billion, with Nobitex being the largest trading platform in the country, holding a market share of about 87%. Other major platforms include Wallex, Excoino, Aban Tether, and Bit24. These local exchanges need to operate under the permission of regulatory authorities and comply with regulations such as anti-money laundering and customer identification.

According to reports, the vast majority of domestic crypto transactions in Iran connect with international markets through Nobitex or similar exchanges. Data shows that between 2018 and the end of 2022, a certain trading platform processed transactions worth $8 billion in Iran, with Nobitex handling transactions worth $7.8 billion. Nobitex has also encouraged customers in blog posts to use specific tokens for anonymous transactions to avoid "endangering asset security due to sanctions."

In addition to Crypto Assets, the Iranian government has also made strides in blockchain technology development in recent years. The most representative projects are two officially supported blockchain initiatives: Kuknos and Borna. The Kuknos network was launched by a consortium of Iran's four major banks and its native token is used for internal settlements within the banking system. At the same time, the Central Bank of Iran collaborated with blockchain companies to develop the Borna platform, providing a blockchain-supported application framework for financial institutions. This indicates that the Iranian authorities also aim to leverage blockchain technology to enhance the efficiency and transparency of the financial system.

In addition, there are reports that Iran and Russia are planning to launch a gold-backed cross-border stablecoin for trade settlement and to evade financial sanctions. There are also indications that the Central Bank of Iran is studying the launch of its own central bank digital currency "Crypto Rial" and plans to connect it to the clearing systems of other countries.

Thanks to its abundant energy resources, Iran recognized the cryptocurrency mining industry as a legal industry in 2018. By 2021, Iran accounted for about 4.5% of the global Bitcoin hash rate, producing nearly $1 billion worth of Bitcoin annually for import trade and to mitigate the impact of sanctions. The Iranian government has implemented preferential electricity pricing policies for cryptocurrency mining farms.

However, due to the burden on the power grid caused by high energy subsidies and regulatory requirements that miners must surrender the Bitcoin they mine to the central bank, many mining operations have chosen to go underground or operate in a circumvention manner. Some institutions estimate that by 2024, Iran's share of the global Bitcoin hash rate will have dropped to about 3.1%.

Regulatory Policies from Open to Tightening

The Iranian government's attitude towards Crypto Assets has undergone multiple changes, showing a trend from early openness to gradual tightening.

Since 2018, Iran has officially recognized the digital currency mining industry as a legal sector to regulate the already prevalent mining operations. The government has implemented measures requiring licensed miners to use efficient equipment and only allows them to sell their mining proceeds to the central bank at a specified price, while paying for electricity at the export price. The low electricity prices have attracted overseas miners, including those from China, to invest in mining in Iran.

However, this "energy exchange for coin" model quickly exacerbated the power shortage. In May 2021, after experiencing a rare summer blackout, President Hassan Rouhani announced a four-month temporary ban on all crypto assets mining activities until late September of that year to alleviate the grid load. Official data stated that legal mining sites consumed about 300 million kilowatt-hours, while unauthorized illegal sites consumed as much as 2 billion kilowatt-hours, severely affecting residential electricity use. Subsequently, during summer electricity peaks, the government has temporarily shut down some mining sites to ensure the supply of electricity for residential use.

In terms of trading regulation, the Central Bank of Iran banned individuals from trading with foreign-mined digital currencies domestically as early as 2020, strengthening control over the circulation of crypto assets. After 2022, regulatory authorities intensified restrictions on crypto advertising and the sale of mining machines. In December 2024, officials ordered a ban on promoting crypto mining machines and related training courses on the Internet, and required major e-commerce platforms to remove related advertising content. In the same month, the energy regulatory department also stated that it would hold illegal mining accountable under the law.

These measures also require compliant mining farms to operate only when there is sufficient power supply, and electricity usage is not allowed outside non-peak periods. As the electricity consumption and safety issues caused by the proliferation of mining machines become apparent, the government has imposed stricter regulations on the mining industry. By the end of 2024, the regulatory focus will shift to crypto transactions themselves. In December 2024, the Central Bank of Iran introduced new regulations aimed at blocking exchange transactions between crypto assets and the rial on domestic websites. In January 2025, a government-designated trading interface was launched, requiring all domestic exchanges to connect to the regulatory system through this channel, facilitating the monitoring of user identity information and fund flows.

In February 2025, the Iranian authorities even announced a ban on publishing Crypto Assets advertisements on any occasion and platform. Following the Nobitex hacking incident in June, the Central Bank of Iran further tightened control over crypto transactions: reports indicate that the Iranian government stipulated that domestic crypto platforms are only allowed to operate between 10 AM and 8 PM (the so-called "crypto trading curfew") to enhance regulatory efficiency and limit capital outflow. Various restrictive measures have emerged one after another, which to some extent also reflect the authorities' balancing act between promoting innovation and maintaining financial security.

The Conflict Between Crypto Assets and Islamic Doctrine

As an Islamic Republic, Iran must also consider the regulations of Islamic law when promoting the development of Crypto Assets. Islamic teachings prohibit all forms of usury and gambling, and the trading of Crypto Assets, due to its volatility and speculative nature, has been questioned by some conservatives.

The Supreme Leader of Iran, Khamenei, holds a relatively open attitude towards this. In 2021, he stated that the buying, selling, and production of crypto assets "must comply with the laws and regulations of the Islamic Republic of Iran" and are not automatically considered contrary to Islamic teachings. In other words, as long as the government allows it, the trading of digital currencies that is conducted according to regulations is not "illegal". Additionally, Khamenei has called on the religious community to provide opinions on new social issues, including crypto assets, to keep the Sharia law up to date.

However, the opinions of different religious scholars are not entirely consistent. Some prominent Shia Grand Ayatollahs take a cautious stance. They believe that cryptocurrencies such as Bitcoin have "many uncertainties," such as the lack of government backing and susceptibility to misuse, and therefore their transactions do not comply with the requirements of Islamic law. Other religious leaders urge followers to adhere to interpretations of religious law from more qualified scholars in situations where the law is unclear.

Although the Iranian authorities do not explicitly consider Crypto Assets as a religious taboo, they emphasize in practice that activities must be conducted within the framework of national laws and regulations to avoid excessive speculative behavior. This position balances the contradictions between Islamic doctrine and modern economic practices to a certain extent.

Amid multiple economic uncertainties, crypto assets continue to attract the attention of a large number of young people and technology professionals in Iran. Analysis shows that with the development of information technology, the popularity of smartphones, and the gradual opening of Iran's external communications, the barriers for ordinary citizens to participate in digital currency trading are decreasing.

One of the most typical cases occurred in the summer of 2024, when a point-earning game became popular in Iran and drew condemnation from officials. At that time, the spokesperson for Iran's National Cyber Space Center issued a warning, stating that he had read a large number of discussions among Iranian users in many groups recently, and claimed that using games for crypto asset mining had become a breeding ground for crime.

This controversy has also attracted the attention of the religious community, with some Shia scholars describing Crypto Assets as "the source of many ills" and urging people to avoid playing games involving Bitcoin.

Participating in the crypto market also comes with risks. Reports indicate that the low level of encryption knowledge in Iran has set traps for criminals: fraud cases are rampant, and many investors have suffered huge losses due to blindly following trends. Anonymous transactions on the black market have also posed challenges for regulation. Additionally, the market itself is highly volatile, and the lack of mature legal protections has led some Iranian families to adopt a cautious or even wait-and-see attitude toward such assets.

Overall, although Crypto Assets are gradually being more widely accepted in Iran, discussions surrounding their legality, security, and morality continue. Today, against the backdrop of significant internet restrictions imposed by the Iranian government and even network outages in several regions, the development prospects of the crypto market may no longer be the primary concern for ordinary citizens compared to the harsh realities of war and national survival.