The announcement of a mid-June 2026 agreement between the United States and Iran on a framework for resolving the conflict that began on February 28 promised immediate relief for transit through the Strait of Hormuz and raised hopes of unblocking international maritime trade and reducing oil prices. The conflict with Iran, or Operation Epic Fury, has become a defining moment for global security, injecting volatility into an already fragile international system. While the immediate humanitarian and geopolitical consequences are important, the conflict’s deeper, longer‑term implications may be felt most acutely in the realm of nuclear arms control and nonproliferation. 

For decades, the global nonproliferation regime, anchored by the Nuclear Non-Proliferation Treaty (NPT), the International Atomic Energy Agency (IAEA) and a web of bilateral and multilateral agreements, has sought to limit the spread of nuclear weapons and reduce the risks of nuclear conflict. Yet the conflict in Iran has exposed structural weaknesses in this regime, challenged long-standing assumptions about deterrence and diplomacy, and risked additional proliferation pressures in one of the world’s most strategically sensitive regions. 

Erosion of Trust in Diplomatic Agreements 

Iran’s nuclear program has been at the center of international diplomacy for many years. The Joint Comprehensive Plan of Action (JCPOA), negotiated by the P5+1 countries in 2015, demonstrated that sustained negotiation could address nuclear activities through verification, inducements, and incentives. Its unraveling, however, weakened the credibility of diplomatic agreements and signaled to states worldwide that nuclear deals may be vulnerable to political shifts. 

Current and historical animosities over a variety of issues have deepened skepticism about the effectiveness of multilateral agreements in containing proliferation. States observing this conflict may conclude that compliance with agreements is often a matter of perception, and that external actors may still resort to military force if threats are recognized despite formal commitments and diplomatic assurances. Conversely, states considering future negotiations may fear that concessions made today could be rendered meaningless by tomorrow’s geopolitical realignments. This erosion of trust undermines diplomatic tools that have historically underpinned nonproliferation efforts. 

Over three decades and six presidential administrations, both Democratic and Republican, one fundamental national security principle has remained constant: The United States will not permit Iran to have a nuclear weapon under any circumstances. 

Conversely, the war could hinder efforts to revive or renegotiate agreements with Iran and other nuclear-aspiring nations. Diplomatic efforts have been exhausted, and the political risks of making concessions have risen. Without credible negotiation pathways, countries may increasingly resort to unilateral actions, such as secretly advancing nuclear programs or emphasizing deterrence. Regarding Iran, the ruling elites, worn down by months of anti-regime strikes, are likely to delay denuclearization and other military restrictions. 

Regional Challenges to Nonproliferation 

The Middle East has long been a region of latent nuclear potential. Several states possess advanced civilian nuclear infrastructures, and many have expressed interest in developing fuel‑cycle capabilities. The conflict with Iran has intensified these dynamics by heightening perceptions of vulnerability. Countries such as Saudi Arabia, Turkey, and Egypt may interpret the conflict as evidence that regional security guarantees are unreliable. 

As a result, they or others may pursue nuclear hedging strategies by developing civilian programs that shorten the timeline for potential weapons development without overtly violating the NPT. Others  may sign mutual defense pacts with other nuclear-armed states. This hedging behavior could trigger a proliferation cascade, in which each state’s actions prompt others to follow suit. 

If multiple states in the region begin to pursue nuclear latency or weapons capabilities, the Middle East could become the world’s most volatile nuclear arena. Such a development would strain the NPT, challenge IAEA safeguards, and increase the likelihood of miscalculation or escalation. 

Spiking Great‑Power Competition  

The conflict with Iran erupted amid intensifying competition among the United States, China, and Russia for international preeminence. These powers have distinct strategic interests in the Middle East and can use nuclear diplomacy as a tool of influence. Their rivalry and differing interests complicate efforts to build consensus on nonproliferation issues, including the ultimate determination about the status of Iran’s nuclear program. 

Great‑power divisions have already weakened the effectiveness of institutions such as the UN Security Council. When major powers cannot agree on enforcement measures, sanctions, or diplomatic strategies, the credibility of the nonproliferation regime suffers. The war has amplified these divisions, making coordinated responses more difficult. As great‑power competition intensifies and long‑standing norms, such as the taboo against nuclear proliferation, may weaken. States may perceive that geopolitical alignment matters more than compliance, reducing the incentive to adhere to international rules. 

Risks to the Nonproliferation Regime’s Tool Kit 

War creates conditions that undermine the ability of the IAEA and other bodies to monitor nuclear activities. Inspectors may lose access to facilities, satellite imagery may be obscured by conflict, and supply chains for nuclear materials may become harder to track. Conflict zones are fertile ground for illicit networks seeking nuclear materials. 

In some cases, the breakdown of state authority increases the risk that sensitive technologies or materials could be diverted, stolen, or sold on the black market. Sanctions on regimes depend on stable political conditions and international cooperation. During local or regional wars, enforcement becomes more difficult, and states may prioritize military objectives over compliance with international obligations. 

Opportunities for Post-Conflict Innovation 

In contrast to the above, major conflicts have sometimes encouraged breakthroughs in arms control. The Cuban Missile Crisis led to the Nuclear Test Ban Treaty; the Cold War produced the Strategic Arms Limitation Talks and other reduction treaties. The war in Iran may similarly prompt a reassessment of existing frameworks. The conflict could motivate states to explore new regional security architectures, such as a Middle East nuclear‑weapons‑free zone, or enhanced transparency measures. 

Although politically challenging, such initiatives could reduce pressures to proliferate. In addition, emerging technologies, such as remote sensing, AI‑assisted monitoring, and blockchain‑based tracking of nuclear materials, could strengthen verification regimes. Post–Epic Fury consultations may accelerate investment in these tools as states seek more resilient oversight mechanisms. 

Conclusion: Future Pathways 

The war in Iran has brought the global nonproliferation regime to a crossroads. One path leads toward fragmentation: weakened norms, regional arms races, and diminished trust in diplomacy. The other path, albeit politically challenging, offers the possibility of progress with new agreements, modernized verification tools, and renewed commitment to cooperative security. Which path the international community ultimately follows will depend on states’ willingness to learn from the conflict and recognize that nuclear stability cannot be taken for granted. If the wider postwar Middle Eastern political alignments sought by the Trump administration comes to pass, including a lasting rapprochement between Israel and Saudi Arabia, the nonproliferation regime may be a beneficiary from reduced regional political toxicity and increased regional military cooperation. 

Stephen J. Cimbala is Distinguished Professor of Political Science at Penn State Brandywine and the author of numerous works on nuclear deterrence, arms control, and military strategy. He is a senior fellow at NIDS and a recent contributor to the Routledge Handbook of Soviet and Russian Military Studies edited by Dr. Alexander Hill (Routledge: 2025). The views of the author are his own. 

The Iran War and Nuclear Weapons: Paths Forward or Backward? was originally published on Global Security Review.

Too few Americans contemplate the role of digital currency volatility in acting as a barrier or an enabler to nuclear deterrence. The reality is that there are opportunities and risks that volatile cryptocurrency plays in the strategic calculus of nuclear states.

Cryptocurrency and Geopolitical Shifts

Cryptocurrencies are decentralized and borderless, challenging traditional financial systems and reshaping how states interact economically. Their volatility stems from market immaturity, speculative trading, regulatory uncertainties, and evolution of these ever-changing technologies. Essentially created to prevent intermediaries, like banks and financial institutions, cryptocurrencies lay the foundation for trustless transactions for illicit activities.

This volatile mix of person-to-person transactions and zero oversight introduces both unpredictability and opportunity, raising questions about their implications for nuclear deterrence, which now must deal with a domain that includes ungoverned access to financial streams that can be used by state and non-state actors to engage in elicit behavior that undermines deterrence stability.

Nuclear deterrence relies on a delicate balance of power, with states maintaining assured second-strike capabilities to dissuade adversaries from initiating conflict. This balance hinges on credibility and capability. Cryptocurrencies, with their volatile swings in value, could serve to undermine stability within a country or enable elicit actors to engage in a range of nonnuclear actions that undermine strategic stability.

The Risks of Cryptocurrency Volatility as a Barrier

Cryptocurrency volatility can act as a barrier to nuclear deterrence by creating financial instability and undermining a state’s ability to project economic power. Traditional nuclear powers depend on stable economies to maintain robust defense capabilities, fund deterrence strategies, and support diplomatic efforts. Sharp and unpredictable fluctuations in digital assets can undermine financial stability, weakening a state’s capacity to fund critical defense initiatives.

For the United States, crypto is not a major issue currently. But, for North Korea, who funds its nuclear program through elicit activities, crypto is important. Proliferators also use crypto to conduct activity. Instability in crypto makes illicit activity even more high stakes and unpredictable.

Instability creates advantages for state and non-state actors to exploit cryptocurrency markets for nefarious purposes, such as evading sanctions, financing proliferation, and bypassing traditional financial controls. The decentralized nature of cryptocurrencies complicates efforts to monitor, track, and regulate illicit activities, potentially undermining efforts to prevent the spread of nuclear weapons or restrict financing for state and non-state actors pursuing destabilizing weapons programs.

Cryptocurrency instability also presents a challenge to strategic stability through cyber threats. If critical financial systems or exchanges are disrupted, or if adversaries manipulate markets to harm a nation’s economy, it could create economic shocks severe enough to destabilize deterrence relationships, increase miscalculation risks, or fuel insecurity-driven arms build-ups.

The Darknet and Conflict Escalation

Darknet cryptocurrency markets empower bad actors by offering anonymity and decentralized financial tools, enabling a wide range of conflict-escalating activities. These markets facilitate the purchase of illegal arms, military-grade technology, and hacking tools, often used to destabilize regions and target critical infrastructure (command-and-control systems) through cyberattacks.

Terror organizations leverage cryptocurrencies for anonymous funding, allowing them to finance operations, recruit globally, and expand their influence. Sanctioned entities exploit these markets to bypass international restrictions and acquire resources that fuel aggressive actions.

The ability to transact anonymously with cryptocurrencies also shields organized crime, including narcotics and human trafficking, whose revenues often fund conflict zones and insurgent groups. Covert exchanges on the darknet can increase espionage, destabilize international relations, and provoke hostilities to serve a radically motivated agenda.

In parallel, extremist groups utilize these platforms to spread propaganda, incite violence, and radicalize populations, further destabilizing fragile regions. The combination of anonymity, decentralized systems, and hidden economies presents a formidable challenge for global security efforts aimed at conflict prevention and stability.

Cryptocurrency as an Enabler of Nuclear Deterrence

On the other hand, cryptocurrency volatility also opens new avenues for strengthening nuclear deterrence through financial resilience and innovation. The decentralized nature of digital assets can enable states to diversify their financial resources and reduce dependency on traditional systems that might be vulnerable to adversarial influence or geopolitical tensions. In times of economic crisis or sanctions, cryptocurrencies can provide states with alternative means to maintain fiscal stability, thus supporting their deterrent capabilities. Countering bad activities with good can be as challenging as the reliance on traditional financial stability for positive security assurance.

Furthermore, blockchain technology, which underpins cryptocurrencies, offers potential for transparency, accountability, and verification mechanisms in arms control agreements. By leveraging blockchain, states can create tamper-proof records for tracking nuclear materials, enhancing verification regimes, and building trust between adversaries. The volatility of digital assets may fuel innovation and drive investment into these applications, ultimately strengthening nuclear stability and deterrence structures.

Balancing the Risks and Opportunities

While the volatility of cryptocurrencies poses undeniable risks, it is essential to approach them with a nuanced perspective to find the right balance between risk and reward. Policymakers must strike a balance between leveraging the opportunities that digital assets present and mitigating their risks to global security. Collaborative efforts to regulate and stabilize cryptocurrency markets can reduce the likelihood of financial instability while harnessing the potential of decentralized systems.

In addition, enhanced cybersecurity measures must accompany any state or multilateral effort to integrate cryptocurrency into the financial systems that underpin deterrence capabilities. Protecting digital infrastructure against malicious actors will ensure that the advantages of decentralized assets are not overshadowed by their exploitation for destabilizing purposes.

A New Strategic Frontier

The volatility of cryptocurrency markets is both a challenge and a frontier for instability of nuclear deterrence. While it poses risks through financial instability, illicit use, and cyber threats, it also offers opportunities for financial resilience, innovation, and transparency. In today’s evolving digital environment, nations must adapt to this dual-edged sword, developing strategies that incorporate the volatility of digital assets into a comprehensive approach to deterrence.

Ultimately, whether cryptocurrencies become a barrier or enabler of nuclear deterrence depends on how nations, regions, and regulators in the broader international community respond to this evolving challenge. By advocating cooperation, innovation, and regulation, cryptocurrencies can strengthen global security architectures and contribute to a stable nuclear order—turning volatility into a force for strategic stability and peace.

Greg Sharpe is the Marketing and Communications Director at the National Institute for Deterrence Studies. The views expressed in this article are his own.

The Volatility of Cryptocurrency: Barrier or Enabler of Nuclear Escalation? was originally published on Global Security Review.