Comprehensive Analysis: The Decline of Iran’s On-Chain Cryptocurrency Activity
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Significant Decline in Iran’s Cryptocurrency Inflows
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Recent data indicates a substantial decrease in Iran’s on-chain cryptocurrency activity during the first half of 2025. The total inflows amounted to $3.7 billion within the first seven months, marking a 10% reduction compared to the same timeframe in 2024. The decline became more pronounced post-April, with June inflows dropping by 50% year-on-year and July witnessing a 75% slump.
Security Breach at Nobitex Erodes Confidence
A report from TRM Labs highlights a critical security breach that occurred at Nobitex on June 18. Approximately $90 million was siphoned from hot wallets, along with the leakage of source code. Additionally, some of the stolen cryptocurrencies were redirected to vanity addresses associated with the Islamic Revolutionary Guard Corps. This incident led to a significant increase in outflows from the exchange, with traders withdrawing over 150% more funds in anticipation of further risks, further undermining already fragile trust.
Sharp Decline in Inbound Transactions
Following the breach, Nobitex experienced a 70% year-on-year reduction in inbound transactions. Some dormant Bitcoin wallets, primarily linked to mining activities, were reactivated, channeling funds into a newly established hot wallet. In response, regulators imposed trading restrictions to curb panic withdrawals. Nevertheless, many users had already moved their assets to international platforms, prioritizing those with less stringent identity verification.
Impact of Stablecoin Freezes on Liquidity
In July, Tether froze 42 wallets affiliated with Iran, significantly impacting stablecoin liquidity on local networks. Over half of these wallets were connected on-chain to Nobitex or addresses associated with the IRGC, though ownership remains ambiguous. Concurrently, Tether also froze $27 million in USDT linked to Garantex, a sanctioned Russian exchange. This action underscores the extensive reach of compliance measures, with the US Treasury having blacklisted Garantex in 2022, affecting market dynamics.
Regional Tensions and Power Disruptions Intensify Market Challenges
The decline in cryptocurrency flows coincided with escalating regional tensions. A 12-day conflict with Israel erupted in mid-June, coinciding with stalled nuclear negotiations. The resulting Israeli strikes and internal disturbances led to widespread power outages, affecting mining operations and complicating trading activities. Many traders opted to transfer their funds off domestic platforms or switch to different stablecoins or blockchain networks.
Introduction of New Tax Regulations
In August, Iran enacted the Law on Taxation of Speculation and Profiteering, extending capital gains taxes to cryptocurrencies, gold, real estate, and foreign exchange. The implementation of this law will be phased, with increased oversight anticipated. This policy shift, coupled with the recent freezes and security breaches, provides firms additional reasons to reconsider or modify their operations.
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