"Next-level warfare": Iran’s drone unveiling signals a broader strategy
On May 21, 2025, Iranian state media unveiled what it described as "next-level warfare" technology — a new fleet of domestically produced drones. The announcement came as Iran continues to support militant groups, including the Houthis in Yemen, and Hezbollah in Lebanon, and Russian forces in Ukraine. As Iran advances its drone and unmanned aerial vehicles (UAV) capabilities, it is also actively exploring how cryptocurrencies can support and sustain these programs.
Iran’s expanding crypto arsenal amid proliferation pressures
While still early, crypto infrastructure is playing a growing role in how Iran adapts to the challenges of long-standing international sanctions. Iranian entities have experimented with virtual assets not only as a financial workaround but also as a strategic asset to support broader geopolitical ambitions — including the proliferation of advanced weapons technology.
As detailed in TRM’s analysis of Iran’s crypto economy, exchanges like Nobitex, the country’s largest crypto exchange, play a central role in facilitating billions in crypto transactions — many of which are linked to global exchanges that have high withdrawal limits without providing Know Your Customer (KYC) checks. Nobitex, as well as other Iranian exchanges, have also utilized advanced techniques for moving customer funds, to decrease the cost of operations and to obfuscate the destination and origin of funds from global services.
TRM has also observed that Iran’s interest in digital finance is not limited to exchanges. On February 14, 2024, the United States Treasury sanctioned entities connected to Iran’s central bank digital currency (CBDC) program, highlighting how Tehran’s digital finance ambitions increasingly intersect with its broader sanctions-evasion strategy. These efforts involve a growing ecosystem of domestic crypto infrastructure that provides both cover and capability for funding activities that extend beyond national borders.
Although Iranian crypto exchanges like Nobitex likely facilitate transactions that support the regime’s sanctions evasion and geopolitical strategy, these platforms are also used by ordinary citizens. For some Iranians, virtual assets represent a lifeline amid inflation and economic isolation — underscoring the dual-use nature of crypto infrastructure in Iran’s digital economy.
The Houthis and crypto
In the past year, the Houthis have emerged as the most prominent member of Iran’s so-called “axis of resistance,” Iran’s proxies and allies that also include Hezbollah, Hamas and Shia Iraqi militias. TRM’s blog post on April 17, 2025, From UAVs to Sanctions Evasion: How the Houthis Use Crypto, examined how the Houthis are increasingly using cryptocurrency amid Yemen’s ongoing civil conflict. TRM’s on-chain analysis revealed:
- Wallet clusters linked to Houthi facilitators
- Patterns of small-denomination inflows through unregistered exchanges
- Use of privacy-enhancing tools like mixers and cross-chain protocols
This mirrors a broader strategy: Iran’s support for proxy groups is not just material, it’s financial, and it increasingly involves blockchain infrastructure to fund asymmetric operations, including maritime disruptions and cross-border attacks.
Crypto, proxies, and the proliferation of conflict
Iran’s financial support to proxies increasingly flows through decentralized and opaque channels — many involving crypto. In Yemen, TRM has traced how Houthi-linked actors leverage virtual assets to circumvent sanctions and sustain operations. These activities often feature:
- Anonymous wallets transacting across blockchains
- High-volume transfers routed through unregistered exchanges
- Use of privacy tools such as mixers
Iran’s role in the Russia-Ukraine conflict
Iran’s support for militant and state actors extends beyond the Middle East. In Ukraine, Iran-supplied drones have become a significant component of Russia’s battlefield arsenal, illustrating the growing military cooperation between the two countries. Alongside these material transfers, TRM has observed similarities in the fundraising and laundering methods used by pro-Russia and Iran-aligned networks — including the use of virtual assets to receive donations and move funds internationally.
On the horizon: Iran’s kinetic and blockchain activities to continue converging
As Iran continues to blur the lines between statecraft and proxy warfare, its reliance on digital financial infrastructure is growing. While still early, Iran is increasingly experimenting with crypto to move funds across borders, support proxy actors, and ease friction in a heavily sanctioned economy. Understanding and disrupting these emerging financial pathways is essential to staying ahead of new threats in an evolving geopolitical landscape.
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