Ayandeh Bank is a major private Iranian lender with roughly 270 branches. Now, this big bank has recently been dissolved by Iran’s central bank in late October 2025 after accumulating massive losses in addition to chronic governance failures. As a result of this dissolution, all its assets and deposit accounts were transferred to state owned Bank Melli. The whole issue has reportedly affected around 42 million customers and also exposed a lot of systemic fragilities across Iran’s banking sector. Now, this is a very big issue that has left me wondering, what could crypto have done to protect customers from such failures? Let’s dig in and try to find out.
What went wrong at Ayandeh
The collapse of Ayandeh was not caused by a single problem, rather it was a toxic mix of scenarios. This toxic mix included aggressive related party lending, concentration of huge exposures in a single mega project (the Iran Mall) and weak capitalisation. In addition to this the bank also has a history of repeated managerial failures and mismanagement. It seems like someone was just playing ball with money and loans without having any idea about what they were doing.
Official figures cited by regulators showed multibillion dollar accumulated losses, heavy overdrafts and negative capital adequacy which was far below prudential thresholds. The bank had accumulated $5.1 billion in losses and nearly $3 billion in debt. Over 90% of the bank’s funds were channeled into related parties projects like the massive Iran Mall and many of which were never repaid. This led the bank to accumulate a negative 600% capital adequacy ratio and an unhealthy performance. In short, this bank had practically become insolvent!
This is the reason why the central bank of Iran became involved.
The intervention of central bank
The Central Bank of Iran (CBI) ultimately intervened, declaring Ayandeh bank bankrupt and transferring its assets and customers to a state owned bank. After this action Iranian authorities assured customers that their savings would be recoverable. However, this incident underscores the profound risks associated with traditional banks that operate fractional reserves and rely on bailouts when things go awry.
For the 42 million customers, this was a period of uncertainty and potential distress. However, this event has become a sobering testament to the vulnerabilities that arise from opaque practices, poor oversight and broader economic pressures like sanctions.
Immediate effects on customers and the system
The intervention of the central bank involved dissolving the bank and transferring deposits to Bank Melli as well as rebranding the bank’s branches. This decision was aimed at preserving liquidity and confidence but it has also done a lot of harm. The decision triggered long queues, caused public alarm and it has also renewed questions about deposit safety and transparency.
I can say that Ayandeh’s failure highlighted that many Iranian banks operate with weak capitalisation and high levels of non performing or insider loans. This has created a contagion risk across the whole of Iran’s financial system.
Why banks fail
This case of Ayandeh Bank’ collapse is not an isolated case as banks allover the world fail all the time. The failure of banks is a deeper symptom of systemic issues prevalent in all centralised financial systems.
Fractional reserve banking is one of the reasons why banks fail. Banks can lend out large portions of customer deposits, meaning that they won’t hold enough cash to cover withdrawals simultaneously. This becomes a risk and it can lead to insolvency.
Many banks die because of financial mismanagement and risky investments. Mismanagement stems from making poor lending decisions, speculative investments and corruption. For example one of the reasons why Ayandeh Bank went under was the large unrepaid loans to related parties.
Economic downturns and sanctions can also cause broader economic crises that impact a bank’s ability to operate severely. The economic crises usually lead to liquidity issues and insolvencies.
And finally one of the biggest problems with banks is lack of transparency. Opaque financial dealings and insufficient regulatory oversights usually allow problems to fester until they become unmanageable.
When several of these factors converge, it's the ordinary citizens that bear the brunt of the fallout. Usually their assets will be frozen, access to funds will be delayed and they will lose trust in their financial institutions.
Could crypto have protected customers from this problem?
As I was scrolling on X today, I came across a few posts asking about whether crypto would have saved the day and prevented this disaster. But the answer is that, crypto wouldn’t do anything alone. However, there is no doubt that crypto would have helped in reducing the risk.
Crypto would have provided an escape from a single point of failure. For example if depositors had held their funds in a self custody wallet, their funds would not have been swept, frozen or transferred by state directed bank resolutions. This would have insulated their holdings from losses emanating from Ayandeh’s balance sheet. Now, let's not get carried away because self custody also has its own risks but in this case it would have been a life saver as customers would have control over their own funds.
Also crypto rails would have ensured that basic payments and remittances are preserved when banking channels were disrupted. This is especially true in an environment constrained by sanctions and correspondent banking churn.
For the politically and financially vulnerable users, decentralised systems would prevent unilateral account seizures or debanking. This is because crypto operates on decentralised networks which makes it resistant to censorship and control.
Crypto also offers transparency and immutability. This is because the blockchain provides transparent and immutable ledgers of all transactions. This is not a direct solution to bank mismanagement but the transparency would have allowed customers to know about the bank's troubles very quickly.
However, it is also important to know that token volatility, regulatory crackdowns, sanctions compliance and technical and educational gaps for mass adoption make crypto difficult to use as a turnkey substitute for insured and regulated deposits. The other thing is that countries like Iran and Zimbabwe are usually restricted to use on/off ramp systems, so completely replacing the banking system is somewhat impractical.
How crypto can protect customers from centralised failures
As a person who uses banking systems, there is a higher chance that your bank will be next. So, the question to ask is how can you protect yourself from such failures of the centralised financial systems. There are several ways crypto can protect savings of citizens from failures:
- Diversified custody involves setting a portion of household savings in non custodial crypto wallets. This helps reduce exposure to bank failures and political seizures.
- DeFi offers smart contract based stablecoins and lending pools can offer alternate liquidity sources. However, care must be taken to make sure that auditability, regulation and risk management are followed by that specific protocol.
- Crypto wallets plus peer to peer markets can restore domestic commerce and cross border remittances during the failure of traditional rails.
- Crypto also offers public ledgers that make certain exposures auditable, and this helps watchdogs and the public detect risk connected to lending earlier.
Final thoughts and conclusion
The collapse of Ayandeh is a warning to both customers and owners of centralised financial systems that centralised systems with weak governance endanger millions. Crypto is not a holy grail for failure but when it is combined with regulation, custody best practices, education and on-ramp infrastructure, it offers a powerful way for diversifying risk. It also offers a way for preserving access to value and building resilience against banking failures.
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References
- Iran takes over failing bank as sector struggles with economic headwinds — Iran International, Oct 23, 2025. https://v1.iranintl.com/en/202510237441. (v1.iranintl.com)
- The Dissolution and Merger of Ayandeh Bank with Bank Melli Iran — NIAC Insights, Oct 24, 2025. https://insights.niacouncil.org/p/the-dissolution-and-merger-of-ayandeh. (insights.niacouncil.org)
- Ayandeh Bank in Iran Fails, Impacting 42 Million Clients — FX Leaders, Oct 27, 2025. https://www.fxleaders.com/news/2025/10/27/ayandeh-bank-in-iran-fails-impacting-42-million-clients/. (fxleaders.com)
- Iran’s largest lender takes control of failed private bank — PressTV, Oct 25, 2025. https://www.presstv.ir/Detail/2025/10/25/757575/Iran-bank-Melli-control-Bank-Ayandeh-failing. (presstv.ir)
- Iran’s Banking System on the Brink: Collapse of Bank Ayandeh Exposes Deep Financial Crisis — Iran News Update, Oct 25, 2025. https://irannewsupdate.com/news/economy/irans-banking-system-on-the-brink-collapse-of-bank-ayandeh-exposes-deep-financial-crisis/. (irannewsupdate.com)
