Cryptocurrency in the War Zone: A Closer Look at Recent Events in Syria

Last weekend, the Assad regime — which ruled Syria for over five decades and had been embroiled in a 13-year civil war — collapsed. The regime's collapse was immediately precipitated by a lightning offensive, led by a number of Syrian opposition factions, most notably Hay'at Tahrir al-Sham (HTS). The offensive culminated in the flight of former Syrian President Bashar al-Assad to Russia and the appointment of a caretaker government until March 2025. These events have meaningful geopolitical implications for actors in the region and great power competition, since Syria was not only the critical linchpin connecting Iran to its most capable proxy, Lebanese Hizballah, but also an important part of Russia's power projection in the Middle East.

Below, we'll take a look at HTS, explore the crypto nexus to the latest developments, and discuss several crypto stories we are watching closely.

Who are HTS?

HTS was the leading group in Syria's armed opposition. Designated by the US Department of State as a Foreign Terrorist Organization and Special Globally Designated Terrorist, HTS has its roots in violent extremism, but officially split from al-Qa'ida (AQ) in 2016 following a disagreement over strategy in combating the regime. HTS leader Ahmed Hussein al-Shar'a, better known by his nom de guerre Abu Muhammad al-Jolani, was previously a member of AQ in Iraq and was detained by US forces in Iraq. More recently, al-Jolani has lobbied the US and other Western governments to delist HTS, emphasizing its opposition to AQ in Syria and desire to protect Syria's religious minorities.

What is the crypto nexus?

We have not observed broad crypto adoption in Syria. Nevertheless, Syrians have found ways to open accounts on foreign platforms and we have tracked HTS fighters who have raised funds in cryptocurrency. As we have covered previously, Syria-based Tajik HTS member Farrukh Fayzimatov aka Farrukh al-Shami was designated in 2021 by the US Department of the Treasury's Office of Foreign Assets Control for using social media to disseminate propaganda and solicit crypto donations on behalf of HTS . To date, al-Shami continues to solicit donations on social media, despite a reported assassination attempt earlier this year. Furthermore, we have observed multiple other militant al-Shami affiliates and pro-HTS social media channels soliciting crypto donations shortly before, during, and after the offensive leading to the regime's collapse.

Below is a machine translated screenshot of a Russian-language, pro-HTS fundraising appeal from Telegram posted 11 December 2024, asking readers to “Aid the Mujahidin” and listing a TRC20 address, which we have redacted.

Our review of activist HTS-affiliated social media crypto campaigns revealed an increase in donation activity after November 27, when the rebel offensive, dubbed Operation Deterrence of Aggression, began in Aleppo, before moving on to Hama, Homs, and finally, Damascus. One campaign received its first donation in late October and received a total of seven donations prior to the 27th, since which time it has received over 30 donations. Another campaign, which only began soliciting donations after the offensive's start, has also received over 30 donations.

Prior to this month's offensive, Northwest Syria was the last stronghold for HTS and what remained of AQ and the Islamic State of Iraq and Syria (ISIS) in the country. We have observed a number of informal money service businesses (MSBs) operating in this area that process crypto transactions.

Similarly, several camps in Northeast Syria, such as al-Hol and al-Roj, are together still home to tens of thousands of internally displaced persons (IDP), including women formerly or currently affiliated with ISIS (often referred to as the sisters in the camps) and their children. We have observed efforts by activist and pro-ISIS social media accounts to raise funds, including via crypto. These efforts frequently purport to gather humanitarian aid, often focusing on the plight of imprisoned women and children, leveraging narratives of neglect, abuse, and poor conditions in the camps to gain legitimacy and bolster fundraising. Cases such as these, in which legitimate humanitarian concerns mesh with extreme ideology and lack of accountability as to the ultimate destination of funds raised, present analytic and ethical quandaries.

As we see in the Reactor graph below, it appears donors have been identifying and supporting multiple donation campaigns related to al-Shami and militant HTS affiliates, in addition to Syrian IDP donation campaigns. Furthermore, it appears al-Shami and the other HTS affiliates have shared some addresses to consolidate their donations. Based on the size of the wallets, and number of transactions, these appear likely to be regional informal MSBs.

Looking ahead

Syria's political fate remains in flux, both internally and in terms of its relations with key regional powers. As the situation continues to evolve, we are keeping a close eye on a number of ways in which crypto's role in the Syrian economy could change:

• Cross-border payments and tradeand bilateral relations with countries that have adopted crypto:
  • The regime maintained close ties to Iran and Russia, both of which have robust cryptoeconomies. However, the military, economic, and logistical aid both countries provided the regime throughout the civil war has cast doubt on the durability of these ties.
  • Throughout modern history, Syria has maintained close cultural and commercial ties with neighboring Türkiye and Lebanon, where monetary instability and high inflation have made crypto in general, and stablecoins in particular, extremely popular.

• Policy: Syria has a caretaker government until March of next year. Taking an official position on digital assets is not likely to emerge as a top priority in the near-term, but as the country rebuilds, broader conversations around reconstruction and technology's role in supporting the Syrian people and economy could spur formal discussions with implications for crypto .
• Sanctions Considerations: Syria (along with Iran, Cuba, and North Korea) remains a comprehensively designated jurisdiction on the State Department's list of State Sponsors of Terrorism. In the event broad sanctions remain in place, participation of specially designated nationals in a future government could increase incentives to bypass the international financial system to evade sanctions, including on-chain, as we have seen in Iran and Russia. We are monitoring how Syria's posture vis-a-vis US and international sanctions could affect crypto adoption and use cases in the country.