Iran's Crypto Sector Under Fire: Geopolitics, Hacks, and Shifting Trust

Iranian cryptocurrency flows declined by 11% in 2025 compared to the same period in 2024, reaching USD 3.7 billion between January and July, according to blockchain analytics firm TRM Labs. The sharpest declines occurred in June and July, with June seeing a 50% year-over-year drop in inflows and July witnessing a 76% decline. These reductions were attributed to a combination of geopolitical tensions, including a 12-day conflict with Israel starting on June 13, a breakdown in nuclear negotiations, and widespread power outages in Iran caused by both Israeli cyberattacks and regime-led internet shutdowns [1].

The Iranian crypto economy’s decline coincided with a significant security breach at Nobitex, the country’s largest exchange, which was hacked on June 18 by a pro-Israel group known as Predatory Sparrow. The attack exposed critical weaknesses in the platform's security and led to a loss of USD 90 million in user funds. Nobitex, which processed over 87% of all Iranian crypto transactions in 2025, suffered significant liquidity disruptions, pushing many users toward alternative platforms and foreign exchanges with laxer KYC requirements [1].

Compounding the challenges, Tether—the world's largest stablecoin issuer—froze 42 Iranian-linked crypto addresses on July 2, removing substantial liquidity from the market and further disrupting settlement channels. This move triggered a coordinated push from Iranian exchanges and influencers encouraging users to migrate their TRON-based USDT balances to Dai (DAI) on the Polygon network. Despite these disruptions, Iranians continue to use stablecoins as a hedge against inflation and a means to circumvent international sanctions that have isolated the country from the global financial system [1].

Iran's reliance on cryptocurrency extends beyond personal finance. The country has leveraged digital assets to procure sensitive hardware such as drone components and AI-related technologies from Chinese chip resellers, bypassing sanctions. Additionally, TRM Labs reported the first known instances of cryptocurrency being used for espionage payments between Iran and foreign operatives, illustrating the country’s expanding use of crypto for covert statecraft [1]. Despite these activities, illicit crypto transactions in Iran account for only 0.9% of total volume—roughly in line with global averages [1].

The geopolitical instability and cybersecurity challenges have accelerated a shift in Iran’s crypto landscape. While domestic platforms face declining trust, many Iranians have pivoted to alternative stablecoins and faster, lower-cost blockchains like Polygon. These adaptations underscore the resilience of the Iranian crypto ecosystem, which continues to serve as a vital channel for capital flight and procurement despite external pressures. The government, meanwhile, has introduced new regulatory measures, including a capital gains tax on crypto trading, signaling a growing intent to formalize and control the digital asset market [1].

As the geopolitical situation remains volatile, Iran's crypto sector—already a critical tool for sanctions evasion and geopolitical strategy—will remain highly sensitive to external shocks. These include not only cyberattacks and international enforcement actions but also shifting regulatory frameworks and evolving user behavior. The combination of declining trust in domestic exchanges, geopolitical tensions, and sanctions enforcement suggests that the Iranian crypto market will continue to adapt rapidly to new conditions in the near term [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)