How the US-Israeli war is collapsing the sanctions regime on Iran
Summary
The ongoing conflict involving the US, Israel, and Iran is weakening the impact of US sanctions on Iran. Iran is increasingly using alternatives like cryptocurrency, China’s renminbi currency, and informal trade systems to bypass US dollar-based sanctions and maintain its trade and financial activities.Key Facts
- US sanctions rely on the dominance of the US dollar in global trade to restrict Iran’s economic activities.
- Iran has greatly increased its use of cryptocurrencies for financial transactions, with values reaching $154 billion in 2025.
- Half of the cryptocurrency value in late 2025 was received by the Islamic Revolutionary Guard Corps (IRGC).
- Iran converts cryptocurrency into China’s renminbi to buy Russian goods and trade in Asian markets.
- Iran charges transit fees in Bitcoin or renminbi for ships passing through the Strait of Hormuz, a key global oil route.
- Bitcoin’s decentralization means payments cannot be frozen by any authority, unlike some digital currencies linked to institutions.
- The use of renminbi is growing globally; in 2024, 30% of China’s trade was conducted in its own currency.
- Informal financial systems like hawala and barter trade are increasingly important for Iran and its partners to avoid US sanctions.
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