You can treat your crypto just like every other currency. When a country makes a trade for USD, they usually don't immediately convert that USD into their native currency, instead they hold on to it and use it to buy something in exchange for their USD. The same can be done with crypto, get paid in BTC, pay the next country in BTC. On an individual scale it makes more sense to be converting currencies, like if i lived in the USA but was remote working in europe and paid in pounds, those pounds would be pretty much useless to me without exchanging, but as country, I could stash those pounds and continue using them for trade. This is probably what Iran is doing, they likely have several clients willing to trade in crypto.

In this sense its just like handing over raw cash. The bank doesn't need to be involved for me to pay my neighbor to shovel my driveway if i give him cash, then he can pay another neighbor that same cash to mow his lawn in a few months. With the cash there is no third party involved in the transactions, unlike say a credit card or bank transfer.

All we have is the promise from the government that the cash is worth something. In crypto's case, its value is overall determined by its users, albeit still quite volatile and unregulated.