Iran's Crypto Ecosystem Under Siege: Cyberattacks, Sanctions, and Shifting Trust

Cryptocurrency flows into Iran declined by 11% year-over-year in the first seven months of 2025, reaching $3.7 billion, according to TRM Labs. The drop, most pronounced in June and July, was attributed to heightened geopolitical tensions with Israel, a $90 million cybersecurity breach at Nobitex, and a major blacklisting of stablecoin addresses by Tether. The downturn coincided with the breakdown of nuclear negotiations, a 12-day conflict with Israel beginning on June 13, and widespread power outages in Iran, driven by both Israeli and state-led internet disruptions. Iranian users frequently rely on stablecoins as a hedge against inflation and a means of bypassing international sanctions that limit the country's access to the global financial system [1].

Nobitex, which processes 87% of Iran’s crypto transactions, was a central factor in the decline. The June 18 hack, attributed to the pro-Israel group Predatory Sparrow, disrupted liquidity and slowed transaction processing. The breach not only exposed critical weaknesses in the exchange’s security but also revealed embedded surveillance capabilities that allowed the platform to monitor users while offering privacy to high-value clients. The attack temporarily shifted users to alternative platforms and contributed to a broader erosion of confidence in domestic virtual asset service providers [2].

The impact of the Nobitex hack was compounded by Tether’s actions in July, when it froze 42 Iranian-linked crypto addresses in what was described as the firm’s largest-ever freeze of funds. This move triggered a coordinated response from Iranian exchanges and influencers, urging users to shift from TRON-based USDT to DAI on the Polygon network. This strategic pivot aimed to preserve liquidity amid escalating sanctions and enforcement actions [3].

Despite these disruptions, Iran continues to leverage crypto for political and economic objectives. The country uses digital assets to procure sensitive goods, including AI hardware, drone components, and other critical technologies from Chinese suppliers, enabling it to circumvent sanctions. Additionally, TRM Labs noted that Iran has employed crypto to fund espionage operations with foreign actors, with one case involving payments to Israeli citizens arrested for alleged spying on Tehran’s behalf [4].

Iran’s crypto ecosystem also revealed systemic vulnerabilities, particularly in the wake of the Nobitex breach. The hack exposed gaps in cybersecurity and user protections, deepening public skepticism toward domestic platforms. The incident also led to increased activity from underground services, such as Novin Verify, which provides forged documentation to help users bypass KYC checks on global exchanges. These activities underscore the resilience of Iran’s crypto market, as users and institutions adapt to external pressures by shifting to alternative networks and tokens [5].

In August 2025, the Iranian government introduced the Law on Taxation of Speculation and Profiteering, marking the first time it would impose capital gains tax on cryptocurrency trading. The law, which includes crypto alongside assets like gold, real estate, and forex, signals a broader attempt to formalize and regulate the market. However, the law’s phased implementation suggests that regulatory certainty remains limited, particularly as geopolitical tensions and enforcement actions continue to shape the sector [6].

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[1] title1 (https://cointelegraph.com/news/iran-crypto-flows-fall-israel-conflict-nobitex-hack)

[2] title2 (https://www.trmlabs.com/resources/blog/irans-crypto-economy-in-2025-declining-volumes-rising-tensions-and-shifting-trust)

[3] title3 (https://www.mitrade.com/insights/news/live-news/article-3-1072139-20250827)

[4] title4 (https://www.panewslab.com/en/articles/401756ae-104c-4880-b58d-ac700b3d1214)

[5] title5 (https://forklog.com/en/irans-cryptocurrency-transactions-drop-by-11-over-seven-months/)