Iran's Crypto Market Collapses as Geopolitics, Hacks, and Censorship Collide

Cryptocurrency inflows into Iran have plummeted in 2025, with geopolitical tensions, cyberattacks, and tightening regulations severely impacting the once-booming market. According to blockchain analytics from TRM Labs, total crypto inflows from January through July 2025 reached approximately $3.7 billion, a 11% decline from the same period in 2024. The sharpest drops occurred after April, with June inflows falling more than 50% year-over-year and July experiencing a steeper 76% decline [1].

A combination of stalled nuclear negotiations with Israel, a 12-day armed conflict beginning June 13, and the $90 million hack of Nobitex, Iran’s largest crypto exchange, contributed to the market’s instability [3]. The geopolitical conflict accelerated capital outflows, with Nobitex outflows surging over 150% in the week before the conflict. Many users moved funds to international exchanges with limited or no Know Your Customer (KYC) requirements to evade stricter oversight [1].

The Nobitex breach, attributed to the pro-Israel group Predatory Sparrow, froze liquidity and disrupted transaction flows. The hack not only exposed security vulnerabilities but also revealed embedded surveillance mechanisms within the platform. The stolen funds were sent to vanity addresses linked to the Islamic Revolutionary Guard Corps (IRGC), effectively rendering them frozen [3]. TRM Labs also traced transactions to IRGC-linked actor Amir Hossein Nikaeen Ravari and the pro-Hamas media outlet Gaza Now, highlighting the political dimensions of the attack [1].

The collapse of trust in domestic exchanges was further exacerbated when Tether froze 42 Iranian-linked addresses in July 2025, many tied to Nobitex and IRGC-affiliated actors [3]. This freeze disrupted transactional flows and pushed users to alternative stablecoins like DAI on the Polygon network. Despite the outflows, crypto remains a key channel for capital flight from Iran, with outbound transactions persisting even amid inflow declines [1].

Nobitex continued to dominate the Iranian crypto ecosystem in 2025, handling over 87% of all transaction volume. Of the $3 billion processed on the platform, approximately $2 billion moved through the TRON network, primarily in TRC-20 USDT and TRX. This concentration, while efficient for users, amplified systemic risks, as demonstrated by the Nobitex hack [3]. In response to the incident and enforcement pressures, users increasingly migrated to Polygon and other low-cost chains, signaling a broader shift in platform preferences.

Iran’s government has also taken steps to formalize regulation, enacting the Law on Taxation of Speculation and Profiteering in August 2025. This law will impose capital gains tax on crypto trading, positioning the asset alongside gold, real estate, and forex in the tax framework [1]. While implementation is expected to be phased, the move reflects Tehran’s intent to integrate digital assets into the broader economic and regulatory system.

Despite the decline in inflows, crypto remains a vital tool for sanctioned entities in Iran. Chinese resellers continue to supply drone components, AI hardware, and electrical equipment via crypto transactions, while a thriving underground KYC bypass industry provides forged identification documents to help users access international exchanges [3]. In 2025, investigators also documented the first known instances of Iran using cryptocurrency for espionage payments, highlighting the asset’s expanding role in covert statecraft [3].

Iranian users have shown resilience and adaptability in the face of these challenges. As enforcement tightens and trust in domestic exchanges erodes, many have shifted to alternative stablecoins and faster blockchains. These changes reflect both the operational flexibility of the Iranian crypto ecosystem and the enduring importance of digital assets in navigating sanctions, geopolitical instability, and financial uncertainty [1].

Source:

[1] Iran's Crypto Economy in 2025: Declining Volumes, Rising Tensions, and Shifting Trust (https://www.trmlabs.com/resources/blog/irans-crypto-economy-in-2025-declining-volumes-rising-tensions-and-shifting-trust)

[2] Geopolitical Chaos Sends Iranian Crypto Flows Plummeting by Over 76% (https://cryptopotato.com/geopolitical-chaos-sends-iranian-crypto-flows-plummeting-by-over-76/)

[3] Iran's Regime Sophisticated Playbook to Circumvent Global Sanctions (https://www.ncr-iran.org/en/news/terrorism-a-fundamentalism/irans-regime-sophisticated-playbook-to-circumvent-global-sanctions)