How crypto became a tool of geopolitical power

For the past decade, cryptocurrency has been described as many things: a technological innovation and a new financial system, but also a speculative asset. However, in recent years, another dimension has emerged, one that is far less discussed yet increasingly important. Cryptocurrency is becoming part of modern geopolitical and financial warfare.

Sanctions, surveillance, and the shift to crypto

Global sanctions are tightening, and traditional banking systems are becoming more controlled and monitored. In response, states, militias, and criminal networks are searching for alternative financial channels, many of which now run through blockchain networks.

Iran is one of the clearest examples of this shift. Cut off from large parts of the global financial system due to sanctions, the country has increasingly turned to cryptocurrency to move money, access foreign currency, and bypass banking restrictions. 

Iran also legalized cryptocurrency mining in part to generate foreign currency under sanctions, and, in some cases, Bitcoin mined has been used to pay for imports and international transactions, according to reports by Reuters and blockchain analytics firms studying Iran’s mining industry and sanctions evasion networks.

Estimates suggest that Iran’s cryptocurrency activity reached between eight and ten billion dollars in 2025 alone. Based on data from Chainalysis and Elliptic, part of this activity is linked to state entities and sanctions evasion networks. It is estimated that Iranian-linked networks have moved hundreds of millions to over one billion dollars in cryptocurrency to bypass sanctions and conduct international transactions outside the traditional financial system.

Reports by Reuters and U.S. Treasury investigations also indicate that Iran’s Islamic Revolutionary Guard Corps used cryptocurrency exchanges to move roughly one billion dollars between 2023 and 2025, using digital assets to circumvent financial restrictions and conduct international transactions that traditional banking systems would otherwise block.

Hezbollah and the rise of digital financing

These networks do not operate in isolation. Iran’s regional allies and proxy groups, including Hezbollah, have also explored cryptocurrency as a supplementary financial tool.

According to Elliptic and Chainalysis, Hezbollah-linked entities received several million dollars in cryptocurrency between 2021 and 2023. While this amount is relatively small compared to traditional funding sources, it reflects a broader trend: crypto is becoming another financial channel alongside cash networks, trade routes, and informal transfer systems. 

It is important to note, however, that most counter-terror financing reports indicate cryptocurrency still represents only a small portion of Hezbollah’s overall funding, which primarily comes from state sponsors, donations, and other traditional financial networks.

Stablecoins, tron, and the new financial channels

Investigations by blockchain intelligence firm TRM Labs identified digital wallets associated with Hezbollah operatives moving tens of millions of dollars, particularly through stablecoins such as Tether on the Tron blockchain. 

Stablecoins are especially attractive in this context because they maintain a stable value and are easier to move across borders quickly without interacting with traditional banks. The Tron network, in particular, is often used for these transfers because of its low transaction fees, fast settlement times, relatively weaker compliance enforcement compared to some other networks, and its popularity for stablecoin transfers in the Middle East and Asia, according to reports from TRM Labs and Chainalysis.

However, this does not mean that cryptocurrency is now the primary financing method for militant organizations. In reality, most funding still comes from state sponsors, donations, and traditional illicit activities. Nonetheless, cryptocurrency is increasingly used as a complementary tool, especially for cross-border transfers, sanctions evasion, and smaller operational funding.

Globally, the use of cryptocurrency by sanctioned entities and illicit networks is growing. According to the Chainalysis Crypto Crime Report, sanctioned entities received more than one hundred fifty billion dollars in cryptocurrency in 2025, shedding light on how digital assets are increasingly integrated into geopolitical and financial conflicts. 

It is important to clarify that this number includes transactions involving sanctioned exchanges, sanctioned countries, and sanctioned entities, not only terrorist organizations, which represents an important distinction when evaluating the scale of illicit crypto activity.

The limits of control in a decentralized system

Again, this truth reflects a larger transformation. Financial warfare is no longer limited to freezing bank accounts or blocking international transfers. It now includes cyberattacks, digital currencies, sanctions, and blockchain tracking. Governments monitor crypto wallets, intelligence agencies track blockchain transactions, and law enforcement agencies seize digital assets linked to illicit networks.

While authorities usually cannot shut down a wallet on a decentralized blockchain such as Bitcoin or Ethereum, they can often stop the money from being used by targeting the points where cryptocurrency interacts with the traditional financial system. 

Exchanges can freeze accounts linked to sanctioned or illicit activity, law enforcement agencies can seize funds held on custodial platforms, and stablecoin issuers such as Tether and Circle can freeze specific wallet addresses. In modern financial enforcement, control is therefore less about shutting down wallets and more about controlling the gateways between digital money and the real economy.

In this new environment, cryptocurrency has become both a tool and a battlefield. It can be used to bypass sanctions, but it can also be tracked more easily than cash because blockchain transactions leave permanent records. This creates a paradox: crypto can be used to hide money, but it can also expose financial networks.

According to blockchain analytics firms Chainalysis, Elliptic, and TRM Labs, terrorism financing represents a very small percentage of total cryptocurrency activity, estimated at less than one percent of global crypto transactions.

For countries like Lebanon, which sit at the intersection of geopolitical conflict, financial crisis, and technological adoption, this evolving relationship between crypto and geopolitics is particularly relevant. Cryptocurrency is not just an investment or a speculative asset. It is becoming part of a larger global financial and political system shaped by sanctions, wars, and shifting power structures.

The future of crypto will therefore not be decided only by investors, developers, or regulators. It will also be shaped by geopolitics, conflicts, sanctions, and the global struggle over financial power and economic control. With wars increasingly moving into digital spaces, the next financial battlefield may not be fought only with currencies and banks, but with code, networks, and blockchains.