Capital Outflow from Iran through Cryptocurrencies Increased by 70% in 2024

A recent report published by the American company Chainalysis indicates that 39% of "illegal" cryptocurrency transactions in 2024 were conducted by countries under U.S. sanctions, including Iran. The report states that entities and countries under U.S. sanctions traded $15.8 billion in cryptocurrency last year, with financial restrictions and geopolitical tensions driving countries like Iran and Russia towards digital assets to circumvent sanctions. Chainalysis, based in New York and specializing in Bitcoin tracking and blockchain analysis, reported on Iran's growing reliance on cryptocurrencies and noted the capital outflow from Iran through centralized exchanges within the country. The report states that in 2024, capital outflow from Iran through cryptocurrencies reached $4.18 billion, marking a 70% increase compared to the previous year. Chainalysis attributed this to Iran's efforts to bypass sanctions, as well as the Iranian people's inclination towards digital assets due to the severe depreciation of the rial and rising inflation in the country. Previous reports have also indicated that many Iranians, in the shadow of international sanctions and economic instability, have turned to cryptocurrencies to preserve their wealth. In such circumstances, the Central Bank of the Islamic Republic blocked the payment gateways of all cryptocurrency exchanges in the country in November and December 2024. This entity then imposed stringent conditions on cryptocurrency exchange platforms in Iran, stating that payment gateways would only be reopened if these conditions were met. Providing transaction details from exchange accounts and all information related to orders and finalized transactions of users were among the requirements set by the Central Bank for cryptocurrency exchanges to issue operational licenses. However, the Chainalysis report shows that despite the severe restrictions on Iranian citizens' use of cryptocurrencies, the Islamic Republic itself is increasingly utilizing this financial technology to circumvent sanctions. The Central Bank of Russia has also recently made efforts to integrate cryptocurrencies into the country's financial system and to establish legal oversight over them. On the other hand, Western agencies have conducted significant operations against cryptocurrency entities linked to Russia in 2024. In August 2024, the U.S. Office of Foreign Assets Control sanctioned three Russian developers for raising cryptocurrency funds and potentially facilitating the sale of drones to Russian forces in Ukraine. In December 2024, the National Crime Agency in the UK dismantled a Russian money laundering network, leading to the arrest of 84 individuals and the seizure of over 20 million euros in cash and cryptocurrency.