The Crypto Market Under Theocracy: The New Battleground of the Iraq War

The dispute between Iran and Israel has extended to the crypto market. On June 18, 2025, Iran's largest crypto exchange, Nobitex, suffered a major blow when a pro-Israel hacker group breached its system, stealing nearly $90 million in assets. The hackers accused Nobitex of helping Iran evade sanctions and fund illegal activities, transferring the stolen funds into accounts associated with anti-Iranian messages.

This incident not only exposed Iran's vast crypto market but also highlighted the deep intertwining of this Islamic theocratic state with the encryption industry.

Funding Channels Under Sanctions

Iran's interest in cryptocurrencies primarily stems from economic and geopolitical pressures. Severe sanctions have restricted the country's conventional financial channels, making cryptocurrencies an alternative means. High inflation and currency devaluation have also driven the development of the crypto market, with many citizens viewing it as a tool for value preservation.

According to analysis, the total amount of cryptocurrency flowing into Iranian exchanges in 2022 was nearly $3 billion, with Nobitex accounting for 87% of the market share. These local exchanges are required to comply with regulations such as anti-money laundering and customer identification.

The Iranian government is also laying out plans for blockchain technology. The officially supported Kuknos and Borna projects aim to enhance the efficiency of the financial system. It is reported that Iran and Russia are planning to launch a gold-backed cross-border stablecoin to evade sanctions. The Central Bank of Iran is also studying the launch of "encryption rial".

Thanks to its abundant energy resources, Iran classified crypto mining as a legal industry in 2018. By 2021, the country accounted for approximately 4.5% of the global Bitcoin hash rate. However, due to tightening regulations and the burden on the power grid, many mining operations moved underground or operated in a non-compliant manner. By 2024, Iran's share of the global Bitcoin hash rate had decreased to about 3.1%.

Policy Fluctuation: From Openness to Tightening

Iran's attitude towards cryptocurrencies has undergone several changes. Since 2018, the government has recognized digital currency mining as a legitimate industry and implemented measures to regulate operations. However, the "energy-for-coin" model quickly exacerbated power shortages. In May 2021, the government imposed a four-month temporary ban to alleviate the load on the power grid. Since then, during peak electricity usage, some mining sites have been temporarily shut down.

After 2022, regulatory authorities strengthened restrictions on encryption advertisements and the sale of mining machines. By the end of 2024, the focus shifted to crypto trading itself. The government launched designated trading interfaces, requiring all domestic exchanges to connect to the regulatory system. In February 2025, officials even prohibited the publication of cryptocurrency advertisements in any context.

After the Nobitex incident, the Central Bank of Iran further tightened controls, implementing a "crypto trading curfew," stipulating that domestic platforms are only allowed to operate between 10 a.m. and 8 p.m. These measures reflect the authorities' trade-off between promoting innovation and maintaining financial security.

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Cryptocurrency and Islamic Doctrine

As an Islamic Republic, Iran must consider Sharia regulations when promoting the development of encryption currency. Islamic doctrines prohibit usury and gambling, and the speculative nature of crypto trading has been questioned.

The Supreme Leader of Iran, Khamenei, has a relatively open attitude, believing that cryptocurrency transactions must comply with national regulations, but do not automatically contradict religious doctrines. He calls on the religious community to provide opinions on new issues so that Islamic law can keep pace with the times.

However, there are differences among scholars. Some religious leaders believe that cryptocurrencies have uncertainties and do not meet the requirements of Islamic law. The official position emphasizes that activities must be conducted within a legal framework to avoid excessive speculation.

Despite the controversies, crypto assets still attract a large number of young people and technology professionals in Iran. With the development of information technology and the popularization of smartphones, the threshold for the general public to participate in digital currency trading has been lowered. However, the low level of encryption knowledge also brings risks of fraud, and coupled with market volatility and insufficient legal protection, some families remain cautious about it.

Overall, cryptocurrencies are gradually being accepted in Iran, but discussions about their legality, safety, and ethics are still ongoing. Under the current shadow of war, the general public may have little time to focus on the prospects of the crypto market.

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