Iran’s cryptocurrency market is facing mounting pressure as regional conflicts and security breaches continue to dampen investor confidence and activity.
According to a recent TRM Labs report, cryptocurrency flows involving Iranian entities totaled $3.7 billion between January and July 2025, marking an 11% decline compared with the same period in 2024.
The decline accelerated after April, with June inflows dropping more than 50% year-over-year and July volumes plunging over 76%. Analysts attribute this sharp downturn to geopolitical instability and operational disruptions, particularly the 12-day conflict with Israel in June, which significantly impacted market activity.
Investor confidence has also eroded amid these ongoing challenges.
Nobitex Breach Shakes Iran’s Cryptocurrency Market
The June 18 cyberattack on Nobitex, Iran’s largest cryptocurrency exchange, executed by the pro-Israel hacker group Predatory Sparrow amid regional tensions, rattled the local crypto market.
The breach, which resulted in losses exceeding $90 million, severely disrupted liquidity for both retail and institutional users, slowing transaction processing. Traders also raised concerns over the security and reliability of domestic exchanges, prompting many to explore alternative platforms.
The situation was further compounded in July when Tether carried out its largest-ever freeze of Iranian-linked wallets, removing a significant portion of stablecoin liquidity. This forced traders to quickly adjust, converting and shuffling holdings to maintain access to liquid stablecoins and continue cross-border transactions.
Despite these challenges, TRM Labs reported that Nobitex remains the dominant exchange, accounting for over 87% of all Iranian-linked crypto transaction volume, particularly in outbound flows.
Iran’s Cryptocurrency Outflows Continue as Inflows Decline
While cryptocurrency inflows into Iran have dropped sharply, outbound volumes have remained relatively stable, underscoring the continued use of digital assets as a channel for capital flight. The report also noted that Iranians rely on crypto to preserve wealth and transfer funds internationally.
Beyond capital flight, Iranian entities reportedly continue using cryptocurrency for sensitive procurement, including drone components and AI hardware, often employing KYC-bypass tools to operate despite international sanctions.
Following the July Nobitex hack, blockchain intelligence firms uncovered that wallets linked to the exchange had been moving funds covertly for months using techniques commonly associated with money laundering. These findings raised concerns about the exchange’s transparency, suggesting that a significant portion of on-chain activity may have involved sanctioned actors or illicit transactions.
Further reports indicated that the Iranian government may have leveraged crypto for espionage purposes, with several alleged spies later arrested by Israeli authorities and reportedly compensated in digital assets.
The persistence of outbound flows highlights that such activities likely continue, reflecting the broad use of cryptocurrency in Iran for both capital movement and strategic operations.
Iran’s Crypto Market Transforms Amid Regulatory Shifts and Sanctions Evasion
Iran’s cryptocurrency regulations have evolved considerably under the pressure of international sanctions, prompting the country to create a distinct framework that balances compliance with domestic economic needs. The government has introduced specific licensing requirements for exchanges while also permitting crypto adoption as a tool to bypass banking restrictions and facilitate international trade.
The ripple effects of the Nobitex hack go beyond individual losses, influencing broader crypto adoption and market dynamics in Iran. Businesses and individuals are increasingly turning to digital assets to hedge against inflation and protect against currency devaluation. This growing reliance makes security breaches like the Nobitex incident particularly damaging, undermining market confidence, prompting traders to reassess their risk exposure to domestic exchanges, and potentially slowing Iran’s progress toward mainstream crypto integration.
