Unveiling the secrets: How Russian businessmen used cryptocurrency and "zero cross-border settlement" to resolve 40% of currency losses in trade with Iran?

To cope with the huge profit losses caused by Iran's strict official exchange rate system, Russian companies trading with Iran developed a complex payment system consisting of cryptocurrency transfers, underground Hawala currency exchange, and "borderless internal settlements." These innovative methods successfully reduced export losses, which had reached as high as 40%, to near zero. However, the war that broke out in June 2025 brought this system, which had taken many years to build, to a complete standstill, and the companies involved are currently waiting for the war to end so they can resume operations.

Huge losses caused by the dual exchange rate system

According to the latest information revealed by BeinCrypto, the fundamental reason why Russian exporters need to find alternatives lies in Iran's unique currency system. Iran implements a multi-currency system, including an official central bank exchange rate, a market exchange rate, and a company-specific exchange rate, with significant discrepancies between them. For example, in May 2024, the market exchange rate was as high as 1.1 million rials per US dollar, but the central bank's official purchase price was only 600,000 rials, almost half the market price. Because Iranian buyers can only purchase foreign exchange through the central bank at the official exchange rate after imported goods arrive at the warehouse, Russian exporters face an average mandatory loss of about 40% per transaction.

Large enterprises can usually only silently bear such losses and wait up to six months for traditional banks to settle in US dollars, but for small and medium-sized enterprises, such financial and time costs force them to seek other solutions.

Cryptocurrency and underground money exchange become the solution

To address the pain points of time-consuming and unprofitable transactions, cryptocurrency has become the most practical payment tool for businesses unwilling to bear a 40% exchange rate loss. Russian companies use intermediaries in the United Arab Emirates (UAE) to pay in rubles, convert the rubles into cryptocurrency, and then transfer the funds across borders to Iran. This method not only preserves tax legality within Russia but also cleverly circumvents restrictions.

Besides cryptocurrencies, the long-established informal money transfer system "Hawala" has emerged as another option. This system relies on the trust between intermediaries; once a code is given, the equivalent amount can be transferred without the funds actually crossing borders. However, Sergey Mikheev, Business Development Director at boiler engineering and construction company BiyskKotloStroy, points out that while the Hawala system works well for small transactions, the systemic risk of intermediaries absconding with large sums increases dramatically.

Internal settlement system with zero cross-border transfers

Of all the options, the most sophisticated is the "zero-capital cross-border" internal settlement structure. This system operates by establishing separate accounts in Russia and Iran, each owned by a Russian import/export company. When Russia exports goods, the system buys them outright from the exporter in rubles within Russia, then sells them directly to the Iranian buyer from the account in Iran, collecting rials in return. Conversely, it uses accumulated rials to purchase Iranian goods and sells them back to the Russian importer.

Through this model, funds do not need to cross national borders at all, and Russian exporters can receive rubles directly in Russia, completely eliminating the risk of exchange rate differences. Mikheev stated that this business model can even bring VAT refunds within Russia to clients, successfully reducing export losses from 40% to almost zero.

The war disrupted a well-developed logistics and financial hub.

Beyond its innovative financial payment systems, this system also relies on Iran's highly cost-effective logistics hub status. Thanks to Iranian government fuel subsidies and a competitive private transport industry, freight costs from China to Moscow via Iran are significantly lower than traditional routes. Furthermore, the East African trade route through Tanzania and Iran saves approximately one and a half weeks of travel time and half the shipping costs.

Unfortunately, the military conflict that erupted in June 2025 brought all of this to an abrupt halt. The conflict not only brought cross-border transactions to a standstill, but also damaged the UAE's data centers, which served as a hub for cryptocurrency infrastructure.

Related reports

The Wall Street Journal reports that the U.S. Department of Justice is investigating Binance for illegally transferring more than $1 billion to Iran.

Netizens want to bet on the Iranian rial: It's dropped by 90%, it's bound to rise! Is this kind of war lottery even worth buying?

The war in Iran has escalated into a "three-front war"! Six neighboring countries have warned of retaliation, and Saudi Arabia may be next to join the fray?