Iran's Digital Blockade Record: When Banks Shut Down, USDT Became the Only Liquid Money
- Core Viewpoint: In the extreme environment of Iran's nationwide internet shutdown and restricted financial system due to social unrest, satellite internet represented by Starlink and cryptocurrencies represented by USDT have become key tools for breaking through information blockades and maintaining financial resilience, respectively, demonstrating the survival value of decentralized technology in high-pressure political environments.
- Key Elements:
- After the Iranian government implemented a large-scale internet shutdown, Starlink became a brief channel for a few users to communicate externally, but was soon subjected to military GPS interference and physical searches, leading to severely unstable connections with data packet loss rates as high as 80%.
- Against the backdrop of the plummeting national currency, the rial, and disrupted banking services, USDT (especially the version based on the Tron network) has been widely used by the Iranian public for savings, settlements, and daily payments to hedge against inflation and financial risks.
- Cryptocurrencies have also been used to evade international sanctions. Data shows that Iran's Islamic Revolutionary Guard Corps transferred approximately $1 billion in funds using USDT through specific trading platforms.
- The internet shutdown environment highlights the decentralized resilience of cryptocurrencies, whose value transfer does not rely on traditional banking physical infrastructure and can be conducted as long as there is a network exit point.
- Analysis points out that the application of cryptocurrencies in Iran is shifting from a speculative attribute to a "survival attribute," becoming a digital refuge for the public amidst fiat currency credit collapse and network blockades.
- Different crypto assets have layers in terms of censorship resistance. Native assets like BTC/ETH, due to their algorithmic neutrality, are seen as more certain ultimate value anchors compared to centralized stablecoins.
Recently, Iran has once again become a focal point. Against the backdrop of nationwide protests, the Iranian government implemented extensive internet and communication control measures on the evening of January 8. That night, Iran's external network connectivity dropped significantly for several hours, with mobile data and fixed broadband services disrupted in most areas.
In this context, the demand for external communication methods and non-traditional financial tools has risen simultaneously. On one hand, satellite internet services, represented by Musk's Starlink, have been used in some areas to restore limited external connectivity. On the other hand, as the local currency continues to weaken against international currencies, crypto assets, represented by USDT, are being used for daily life and even military purposes.
Meanwhile, escalating regional geopolitical tensions have further amplified Iran's currency pressure. The USD to Iranian Rial exchange rate has fallen to a historic low in the free market, indicating a deepening currency crisis. Below, the CoinW Research Institute will analyze this event.
I. The Starlink Gambit: A Suppressed Digital Window
Starlink as a Fleeting Digital Window
In the initial hours after the nationwide internet shutdown began on January 8, this lifeline was briefly activated. The few users who could still access the external internet via Starlink became crucial links for information dissemination. Iranian citizens raced against time to upload on-site videos and text records, which were then circulated via social media platforms like Telegram.
During this phase, the Starlink user base numbered in the hundreds of thousands and was highly dispersed. With conventional communications completely paralyzed, Starlink became a vital channel for getting these messages out. Increasing calls were made for Musk to expand Starlink support for Iran. However, real-world constraints were equally clear: without a sufficient number of ground terminals, any satellite coverage would remain a castle in the air.
Escalation of Electronic Warfare: GPS Jamming and Encirclement
However, this faint digital beam soon faced systematic suppression. The Iranian military quickly deployed military-grade electronic warfare equipment to implement high-intensity, wide-ranging interference against Starlink satellite signals, causing the connection stability of Starlink terminals to plummet.
Starlink's operation relies heavily on GPS signals for satellite positioning and time synchronization. Iran's GPS jamming methods, originally intended for wartime anti-drone operations, were directly repurposed to suppress satellite internet. On the first day of the blackout, the average data packet loss rate on the Starlink network reached 30%, with some areas experiencing rates as high as 80%, rendering it nearly unusable. Although this jamming could not achieve absolute nationwide coverage, it was sufficient to cause Starlink to go silent on a large scale in Iran for the first time.
The Iranian authorities also launched simultaneous systematic crackdowns on legal and physical fronts. During the blackout, security forces intensified searches for satellite terminals. Drones were deployed to patrol rooftops, specifically looking for Starlink's distinctive dish-shaped antennas; targeted electronic shielding was applied to residential areas suspected of having terminals, covering specific frequency bands with high-intensity noise.
Under this high-pressure environment, those still attempting to use Starlink had to adopt extreme evasion strategies. Some tried to hide communication signatures using multi-layered VPNs, while others constantly moved antenna locations, shortened operation times, and even went online only briefly during late-night hours.
The Iranian authorities are also preparing for a long-term confrontation. On one hand, they are implementing a whitelist internet access mechanism, allowing only government-approved institutions limited access. On the other hand, they are accelerating the development of a "national intranet" system to permanently isolate the public from the global internet.
II. Cryptocurrency: A Safe Haven Amidst a Collapsing Local Currency
The internet blockade not only created an information vacuum but also rapidly impacted Iran's already fragile financial system. Against the backdrop of intermittent banking service disruptions, restricted cash flow, and the continuous devaluation of the Rial, cryptocurrency, especially the stablecoin USDT, has become a basic medium of exchange.
Stablecoins, represented by USDT, exhibit a clear duality within Iran's economic system. On one hand, USDT is used by residents as a hedge to mitigate inflation risks and alleviate uncertainties arising from financial system restrictions. On the other hand, stablecoins are also used for military fund flows, serving a role in circumventing sanctions in specific scenarios.
Civilian Level: Stablecoins as a Hedge Asset
From a civilian perspective, the years-long depreciation of the Rial has continuously eroded residents' purchasing power. With limited access to foreign exchange and difficulties reaching international clearing systems, many citizens have gradually shifted their savings from the local currency to dollar-denominated stablecoins. Among these, USDT issued on the Tron network is particularly prevalent in Iran due to its low fees, fast transfer speeds, and strong liquidity. USDT is widely used for inflation-resistant value storage, over-the-counter (OTC) transaction settlements, and even some daily payment scenarios.
This trend has further amplified during periods of social instability and rising financial risk. On the eve of the protest outbreak in December 2025, a large number of residents converted Rials to USDT through OTC channels. Iranian authorities began tightening regulatory policies, explicitly stipulating that individuals' stablecoin holdings must not exceed the equivalent of $10,000, with an annual purchase limit of no more than $5,000.
Military and Sanctions Level: The Cross-Border Settlement Function of Stablecoins
Beyond civilian use cases, stablecoins are also used in Iran's cross-border fund flows related to military-industrial and sanctioned entities. In 2025, Iranian defense-related export agencies publicly stated in promotional materials their support for using cryptocurrency as a payment method, which involved exports of certain military-industrial products and equipment.
According to data from TRM Labs, since 2023, Iran's Islamic Revolutionary Guard Corps (IRGC) has transferred approximately $1 billion in total using two UK-registered crypto trading platforms, Zedcex and Zedxion, with most transactions primarily using USDT on the Tron network. This reflects that, in a sanctions environment, stablecoins can also serve as an alternative settlement channel.
Extreme Environments: The Technical Boundaries of Decentralization
The nationwide internet blackout in Iran severely compressed the immediate usability space for cryptocurrency but also objectively spurred exploration into the feasibility of crypto under extreme conditions. Civilians began experimenting with various coping strategies. Some users with better technical conditions relied on satellite links like Starlink to barely maintain connections with blockchain networks, preserving limited crypto transaction capabilities even with highly unstable communications.
Meanwhile, crypto assets, based on code consensus, demonstrated remarkable resilience when physical infrastructure was compromised. In contrast, the traditional banking system has an absolute dependence on physical infrastructure and administrative access. When the banking system goes offline or shuts down due to turmoil, individuals cannot access funds held in centralized institutions even if they have network connectivity. The boundaries of crypto assets are virtually limitless; as long as there is an exit point on the chain, assets can transfer value across borders and blockades. Crypto assets have thus expanded the boundaries of financial services to a broader space.
III. Observations and Reflections on the Digital Rights Struggle
From Territorial Sovereignty to Private Key Sovereignty
In the past, states primarily controlled citizens' right to survival by controlling banks and fiat currency. However, crises in Iran and Venezuela suggest that geographical territory may be losing absolute control over wealth. As long as individuals hold their private keys, their wealth is no longer subject to the collapse of domestic banks or the devaluation of fiat currency. This awakening of private key sovereignty represents the core value that cryptocurrency exhibits in extremely volatile regions.
The Resilience and Stratification of Crypto Assets
Cryptocurrency enables both ordinary Iranian families to preserve their savings during inflation and allows sanctioned entities to continue accessing resources through crypto networks. This dual nature also reflects the resilience of cryptocurrency, especially fully decentralized cryptocurrencies like BTC, which reject any form of political screening. They serve neither the powerful nor belong solely to the weak; they are loyal only to the algorithm. This cold neutrality is precisely the fundamental reason they can achieve global consensus in a turbulent world.
However, when facing extreme political pressure and compliance scrutiny, different categories of crypto assets exhibit clear stratification. Centralized stablecoins like USDT, while possessing the functional advantage of value anchoring, have centralized control mechanisms embedded in their contract layers. This means the issuer can, based on external legal orders or compliance pressure, freeze assets for specific addresses at the smart contract level, indicating that USDT still struggles to escape the risk of external credit intervention.
In contrast, native crypto assets like BTC and ETH have no single controlling entity and possess high censorship resistance, enabling permissionless self-settlement. In the survival game where traditional banking systems fail and centralized protocols are restricted, these native assets, constrained only by algorithmic logic, may become the only certain value anchor in extreme environments and the final credit safeguard beyond technical boundaries.
Simultaneously, this demand for absolute censorship resistance further fuels industry exploration into privacy coins. By shielding transaction addresses and amounts, privacy coins attempt to add an information concealment layer atop algorithmic rigidity to counter increasingly stringent on-chain tracking and sanctions, thereby constructing deeper technical defense barriers in extreme environments.
The Shift of Cryptocurrency from Speculative to Survival Attributes
The cases of Iran and Venezuela also signal that, under geopolitical conflict, cryptocurrency may become a survival safe haven for ordinary people. When fiat currency loses credibility and the internet is cut off, the value of cryptocurrency is no longer defined by its price increase but by its ability to support individual survival. This shift from a speculative attribute to a survival attribute will prompt more economies on the fringes of the global credit system to fundamentally embrace the crypto ecosystem at its core logic, viewing it as a digital refuge for modern civilization under extreme suppression.
