Currencies February 3, 2026

U.S. Probes Crypto Links to Iran as On-Chain Activity Surges

Investigators are examining whether virtual-asset platforms helped state-linked actors move funds abroad amid a sharp rise in Iranian crypto transactions

By Hana Yamamoto
U.S. Probes Crypto Links to Iran as On-Chain Activity Surges

U.S. authorities are assessing whether certain cryptocurrency platforms have been used to help Iranian state-linked actors and others evade sanctions, as blockchain firms record a surge in crypto flows connected to Iran. Estimates from multiple analytics firms point to billions of dollars in on-chain activity in recent years, with disagreement over how much of that volume is state-linked versus retail-driven. Analysts and enforcement officials warn tracing and enforcement remain challenging given the pseudonymous nature of wallets and the ease of creating new addresses.

Key Points

  • U.S. investigators are probing whether cryptocurrency platforms helped Iranian state-linked actors evade sanctions, with blockchain researchers indicating direct Treasury interest.
  • Blockchain analytics firms report multi-billion dollar crypto flows tied to Iran, but they disagree sharply on how much of that volume is state-linked versus retail-driven, affecting assessments of enforcement priorities in financial services and sanctions compliance.
  • Domestic economic pressure, rial devaluation and political instability have driven increased crypto adoption in Iran, impacting payment systems, local exchanges and cross-border fund flows.

U.S. investigators are evaluating whether specific cryptocurrency platforms facilitated sanctions evasion by Iranian officials or other state-linked actors, according to a blockchain researcher with direct knowledge of Treasury concerns. The inquiry comes as cryptocurrency usage in Iran has expanded significantly, with analytics firms reporting multi-billion dollar transaction volumes in recent years.

TRM Labs and Chainalysis, two U.S.-based blockchain analysis companies, have produced estimates showing that crypto activity tied to Iran has been substantial. TRM Labs recorded roughly $10 billion of Iran-connected crypto flows last year, down from about $11.4 billion in 2024. Chainalysis reported Iranian-linked wallets received a record $7.8 billion in 2025, an increase from $7.4 billion in 2024 and $3.17 billion in 2023.

Ari Redbord, global head of policy at TRM Labs, told Reuters he had direct knowledge that the U.S. Treasury is probing whether crypto platforms have been used by state-linked players to evade sanctions when moving money overseas, securing hard currency or procuring goods. Redbord did not identify any specific platforms under investigation or disclose where they were based.

A Treasury spokesperson directed queries to a September statement that outlined measures the department said it was taking against so-called shadow banking networks supporting Iran, including networks that the Treasury has said used crypto to skirt sanctions.


Where the activity is concentrated

Estimating the full scale and composition of Iran-related crypto usage is difficult, analysts say. Wallet addresses on blockchains are pseudonymous - recorded as strings of letters and numbers - which complicates attributing ownership or location to transactions. Researchers infer connections using a combination of data sources, such as web traffic and wallet addresses previously identified by governments as linked to sanctioned entities.

Despite the difficulty of assembling a complete picture, different analytics firms have produced sharply differing views on how much crypto activity is state-directed.

  • Chainalysis estimates that roughly 50% of Iran’s crypto volumes last year were linked to the Islamic Revolutionary Guard Corps, the IRGC, which is a major political, military and economic force in Iran.
  • By contrast, TRM Labs estimates that about 95% of Iran-linked flows originate from retail investors. TRM says it has, however, identified more than 5,000 addresses it labels as IRGC-linked and estimates the IRGC has moved about $3 billion worth of crypto since 2023.
  • British blockchain researcher Elliptic reported that the Central Bank of Iran acquired at least $507 million worth of the stablecoin USDT in 2025, characterizing the purchases as a sophisticated attempt to bypass the global banking system. Reuters did not independently verify Elliptic’s findings.

The Iranian mission to the United Nations did not respond to emailed requests for comment regarding allegations about the IRGC or the central bank’s use of crypto.


Why crypto use is rising in Iran

Analysts point to several economic and political pressures that have driven Iranians, both institutional and retail, toward digital assets. The country has been largely cut off from the dollar-based global financial system, and the rial has undergone rapid devaluation. While oil remains Iran’s dominant source of foreign currency - with oil revenues estimated at $53 billion in 2023 according to U.S. government Energy Information Administration figures cited by analysts - access to hard currency through traditional banking channels is constrained by sanctions.

Tom Keatinge, director of the Centre for Finance and Security at the Royal United Services Institute, warned that intensifying economic pressure on Iran tends to increase reliance on alternatives such as crypto. "The harder one squeezes the Iranian economy, the more one better be ready to deal with the consequences, one of which is the expanding use of crypto," he said.

Political crises have also coincided with pockets of increased crypto activity. The past year saw a 12-day conflict with Israel, U.S. strikes on Iranian nuclear sites, and a wave of domestic protests followed by a harsh government crackdown. These developments occurred alongside new U.S. sanctions imposed last month that targeted 18 individuals accused of involvement in shadow-banking networks linked to sanctioned Iranian financial institutions.


Enforcement and tracing challenges

Blockchain researchers and enforcement officials say the pseudonymous nature of crypto wallets, combined with the ease of creating new addresses, complicates efforts to trace transactions and enforce sanctions. Andrew Fierman, head of national security intelligence at Chainalysis, noted that once a wallet is publicly identified or sanctioned, operators can create new wallets to continue activity, which makes tracking and enforcement more difficult.

Keatinge said the scale of the task for U.S. authorities is large. He described the work required - including blockchain tracing and sanction designations - as resource-intensive and likened enforcement to "the ultimate high-speed whack-a-mole game."

Private sector responses are also visible. Tether, issuer of the USDT stablecoin, said it enforces a zero-tolerance policy toward criminal use of its tokens and that it cooperates closely with law enforcement to identify and freeze assets connected to illicit activity.


Retail adoption and exchange dynamics

Beyond state-linked actors, a substantial portion of crypto usage in Iran appears to come from ordinary citizens seeking stores of value amid currency instability. Researchers told Reuters that retail interest in crypto rose notably during episodes of social and geopolitical turbulence last year, including during the protests, until the government imposed an internet blackout on January 8 that limited online activity.

Nobitex, the largest local crypto exchange in Iran, provided industry-based estimates that about 15 million people in Iran have some exposure to or use crypto assets. Nobitex said it has approximately 11 million customers and that most activity comes from retail and smaller investors. The exchange characterized crypto primarily as a store of value for many users responding to the depreciation of the rial.

Users in Iran can move assets off local exchanges to self-custodied wallets or to platforms abroad, analysts say. Singapore-based researcher Nansen reported that some Iranians withdrew funds from Nobitex during 2025, with balances of major cryptocurrencies dropping significantly from a mid-year peak. Nansen said it identified hundreds of thousands of dollars worth of crypto that were transferred from Nobitex to international exchanges.

Analyst Nicolai Sondergaard at Nansen described this trend as reflecting a larger structural pattern: "These funds did not simply leave crypto. Instead, they increasingly moved to international exchanges. Overall, the data suggests crypto in Iran acted as a slow, structural exit route throughout 2025."

Nobitex acknowledged that some customers may use crypto to transfer funds internationally but said it does not track the destination or purpose of such transfers. The exchange emphasized that it monitors activity and performs checks to identify potentially suspicious transactions as part of its asset protection measures. Nobitex also noted that the June hack, which targeted the exchange, likely raised user concerns about asset safety and prompted many to move funds into self-custodied wallets as a precaution while they assessed whether to redeposit funds later.


What remains unclear

Despite multiple analyses and public statements, significant uncertainties persist about the exact scale, purpose and beneficiaries of crypto flows linked to Iran. Researchers employ differing methodologies and reach divergent conclusions on the balance between state-linked and retail activity. Some firms point to major institutional actors such as the IRGC and the central bank as substantial participants, while others contend the bulk of volume originates from retail users.

Wherever the balance ultimately lies, the increasing use of crypto in Iran poses a complex challenge for regulators and enforcement agencies that must reconcile limited visibility, the ease of address creation, the global dispersion of trading platforms, and the political and economic drivers that push individuals and institutions toward digital assets.

Risks

  • Tracing and enforcing sanctions is hampered by the pseudonymous nature of crypto wallets and the ease of creating new addresses, increasing compliance and enforcement costs for regulators and financial institutions.
  • Divergent analytics and limited visibility create uncertainty over how much crypto activity is state-directed versus retail, complicating policy responses and potentially affecting sanctions targeting and financial markets.
  • Cybersecurity incidents, such as the June hack of a major Iranian exchange, and internet shutdowns during protests can undermine asset safety and prompt capital flight to international exchanges, affecting exchange operators and cross-border liquidity.

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