Iran Emerges as Crypto Heavyweight With $7.8 Billion Market, Eyes Coin Tolls in Hormuz

Iran has emerged as a major player in the cryptocurrency market. Years of international sanctions and a sharp plunge in the rial have driven the regime to use digital assets to defend its currency and make payments.

Blockchain analytics firm Chainalysis said on July 12 that Iran’s crypto market totaled $7.8 billion last year.

Iran’s central bank is known to have secured at least $570 million of the dollar-pegged stablecoin Tether to support the exchange rate and settle trade payments. Blockchain analytics firm Elliptic found that the Central Bank of Iran bought Tether twice in April and May last year. Elliptic said Tehran most likely used Tether to buy rials in an effort to slow the currency’s collapse. The exchange rate was about 1.31 million rials per dollar this month, compared with about 32,000 rials per dollar in 2015.

The Iranian regime is using billions of dollars worth of cryptocurrency to buy weapons and raw materials and to stockpile funds. The Wall Street Journal reported that the Islamic Revolutionary Guard Corps is one of the most active users in Iran’s crypto market. Iran has also said it wants to collect cryptocurrency tolls from tankers passing through the Strait of Hormuz.

Iranians also appear to prefer crypto to their own currency. Outflows from Nobitex, Iran’s largest cryptocurrency exchange, jumped 700% immediately after the US attack on Iran began in February. Nobitex, which has more than 11 million users, is a key channel for Iranians to exchange rials for Tether and then convert it into other currencies abroad. Bitcoin outflows reached about $10.3 million in the two days immediately after the war began.

Han Myeong-hyeon, Hankyung.com reporter, wise@hankyung.com