Iran Crypto Market Shaken by Hack, War, and Tether’s Blacklist Move

Iran's cryptocurrency flows have seen a notable decline of 11% year-on-year, according to TRM Labs, with inflows into Iranian trading platforms reaching $3.7 billion between January and July 2025. This decline is attributed to several factors, including the breakdown of nuclear negotiations with Israel, a $90 million hack of Nobitex, Iran’s largest crypto exchange, and the blacklisting of 42 Iranian-linked crypto addresses by Tether. The hack, carried out by a pro-Israel group known as Predatory Sparrow on June 18, led to a sharp drop in user confidence and disrupted liquidity in the Iranian market. Nobitex, which handles 87% of the country’s crypto transactions, has seen users shift to alternative platforms, slowing transaction processing and reducing market confidence [1].

The geopolitical tensions between Iran and Israel, which escalated in late June with a 12-day conflict, further intensified the outflow of funds from Iranian platforms. During the most volatile week, outflows surged by over 150%, with a significant portion of these funds moving to high-risk foreign exchanges that lack robust Know Your Customer (KYC) checks. This shift highlights a growing trend of Iranian users seeking to circumvent domestic restrictions and access global markets [1].

In addition to the hack and geopolitical tensions, Tether’s decision to blacklist Iranian-linked addresses on July 2 also contributed to the downturn in crypto flows. This move prompted Iranian exchanges and influencers to advise users to offload their USDT holdings on the TRON network and migrate to Dai (DAI) on Polygon. While this shift has not fully offset the losses, it underscores the adaptability of the Iranian crypto ecosystem in response to external pressures [1].

Despite these challenges, Iran continues to leverage cryptocurrency for strategic purposes. According to TRM Labs, the country uses crypto to purchase sensitive goods from Chinese chip resellers, including components for artificial intelligence and drone technology. This enables Iran to bypass economic sanctions and continue its technological development. Additionally, Iran has been using crypto to facilitate espionage payments with foreign operatives. However, illicit transactions in the Iranian crypto market remain relatively small, accounting for less than 1% of total volume [1].

The decline in crypto flows has not deterred everyday Iranians from using digital assets as a hedge against inflation. Stablecoins remain a crucial tool for Iranians to preserve wealth amid the country’s economic instability. The reliance on stablecoins reflects a broader trend across the Middle East, where digital assets are increasingly viewed as a means of financial resilience in the face of macroeconomic uncertainty [1].

Source: [1] Iranian crypto flows fall 11% on Israel conflict, Nobitex hack (https://cointelegraph.com/news/iran-crypto-flows-fall-israel-conflict-nobitex-hack)