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Drawing on racial formation theory, symbolic interactionism, and critical race scholarship, we argue race operates as a form of capital whose value depends on recognition by the state, institutions, and others. We advance this argument through analysis of 100 semi-structured, in-depth interviews with first-generation Iranian immigrants living in the United States in spring to summer 2025. Rather than treat Iranian immigrants as an exceptional group, we position this case as analytically useful for understanding how many immigrants navigate racial hierarchies. Specifically, this study examines how respondents reason about racial self-identification when a Middle Eastern and North African (MENA) category appears alongside existing U.S. Census categories. Qualitative coding reveals three interrelated mechanisms shaping racial self-identification. First, respondents understood whiteness as an asset associated with safety, legitimacy, and bureaucratic advantage, even as respondents recognized its conditional nature. Second, respondents engage in boundary-making against panethnic categories, rejecting MENA when it collapses ethnic, religious, and national distinctions or imports geopolitical stigma. Third, racial self-identification shifts across settings as individuals anticipate discrimination, surveillance, or opportunity. Our analysis demonstrates racial self-identification is not as a fixed identity claim but as a dynamic response to unequal systems of recognition and power.