Iran and Other Sanctioned Nations Are Using Crypto to Skirt Global Regulations: Chainalysis

Countries under United States sanctions heavily use crypto as a financial workaround for the restrictions that limit their access to the global banking system, according to a report from Chainalysis published on Feb. 19.

The report highlighted that sanctioned countries received over $15.8 billion in cryptocurrency in 2024, accounting for approximately 39% of all illicit crypto transactions last year.

Ongoing geopolitical tensions, including the Russia-Ukraine war and the crisis in the Middle East, led to intense financial sanctions from the U.S. on countries such as Iran and Russia.

“The U.S. and its allies continued to take aim at Russia’s wartime economy, while actions against Iran’s Islamic Revolutionary Guard Corps (IRGC) escalated, affirming a deeper commitment to curbing state-backed financing,” the Chainalysis report highlighted.

The report found that despite crypto being used for illicit activities, crypto is a lifeline for people facing economic hardship under restrictive regimes. “Many individuals and businesses in these regions turn to cryptocurrency to preserve wealth, move funds across borders, and circumvent government-imposed financial controls — an adaptation we have identified in Iran,” the report reads.

In February 2025, the new U.S. administration introduced the National Security Presidential Memorandum (NSPM-2), reinstating the “maximum pressure” campaign on Iran.

Increasing U.S. Scrutiny

The U.S. Treasury's Office of Foreign Assets Control (OFAC) sanctions entities involved in illegal activities. In 2024, the regulatory body issued 13 designations that included cryptocurrency addresses, the second-highest number in the last seven years.

OFAC already targeted crypto mixer Tornado Cash in 2022 for facilitating the laundering of over $455 million in stolen funds linked to North Korea’s Lazarus Group.

“Despite OFAC sanctions, legal action, and the arrests of its developers, Tornado Cash continues to process illicit transactions,” Chainalysis noted, addressing the continued illicit activity on the platform in 2024 driven by stolen funds, which reached a three-year high, accounting for 24.4% of total inflows.