Iran's Crypto Slide: Hacks, Sanctions, and Shifting Trust Under Fire

Iranian cryptocurrency flows declined by 11% in 2025 compared to the same period in 2024, hitting $3.7 billion in total value from January to July, according to a report by blockchain analytics firm TRM Labs. The downturn was driven by a combination of geopolitical tensions, including a 12-day conflict with Israel starting June 13, a major hack on Iran’s largest crypto exchange, and a significant blacklisting event involving the stablecoin issuer Tether. These events compounded existing challenges, including a breakdown in nuclear negotiations and widespread power outages linked to cyber and kinetic operations.

The most significant disruption came from the $90 million hack of Nobitex on June 18, which handles over 87% of the country’s crypto transactions. The breach, attributed to the pro-Israel group Predatory Sparrow, led to the exposure of user funds, disrupted liquidity, and temporarily pushed users toward alternative platforms. Despite the hack, Nobitex remained the dominant exchange in Iran, handling more than $3 billion in transactions during the first seven months of 2025, with $2 billion flowing through the TRON network. The attack not only affected Nobitex but also weakened overall confidence in Iranian virtual asset service providers (VASPs), exacerbating the decline in inflows and accelerating capital flight.

In addition to the Nobitex hack, the blacklisting of 42 Iranian-linked Tether (USDT) addresses on July 2 further disrupted the market. Tether’s action, described as its largest-ever freeze of Iranian-linked funds, removed significant liquidity and prompted a coordinated effort from Iranian exchanges and state-backed channels to shift users to DAI on the Polygon network. This transition highlighted the agility of both retail and institutional participants in adapting to regulatory and enforcement measures. However, the move also underscored the fragility of Iran’s reliance on stablecoins for economic stability and sanctions evasion.

Iran’s crypto ecosystem has long served as a tool for evading international sanctions. The country continues to use digital assets to procure sensitive goods, including AI hardware, drone components, and electrical equipment, often sourced from Chinese resellers. In 2025, investigators also noted the first known instances of cryptocurrency being used for direct espionage payments between Iran and foreign operatives. Despite these uses, illicit transactions in Iran accounted for less than 1% of total volume, according to TRM Labs, aligning with global averages for crypto crime.

The Iranian government has also taken regulatory steps to assert control over the sector. In August 2025, it enacted the Law on Taxation of Speculation and Profiteering, which introduced a capital gains tax on cryptocurrency trading for the first time. This law places crypto alongside other speculative assets such as gold and real estate, signaling a shift toward formal regulation and taxation. However, the law’s implementation is expected to be phased, and it remains unclear how it will impact user behavior or market liquidity.

The decline in Iranian crypto flows reflects broader instability in the country’s economy and political landscape. The combination of geopolitical conflict, cyber disruptions, and internal instability has created an environment of uncertainty, pushing users to seek alternative platforms and settlement methods. While the ecosystem has shown resilience—such as the migration of funds to faster, lower-cost chains like Polygon—public trust in domestic VASPs has eroded significantly. As the geopolitical landscape continues to evolve, Iran’s crypto sector remains a volatile and highly sensitive component of its economy, shaped by external pressures and internal challenges.

Source:

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

[2] 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)

[3] Iranian crypto flows fall 11% on Israel conflict, Nobitex hack: TRM Labs (https://mx.advfn.com/bolsa-de-valores/COIN/FLOWUSD/crypto-news/96707184/iranian-crypto-flows-fall-11-on-israel-conflict)

[4] Crypto Regulations in the Middle East Statistics 2025 (https://coinlaw.io/crypto-regulations-in-the-middle-east-statistics/)