How the FATF Blacklist Is Reshaping Crypto Use in Iran

When the FATF added Iran to its blacklist in 2019, few expected it to trigger a full-scale financial rebellion. But that’s exactly what happened. With international banks cut off, SWIFT blocked, and foreign currency access nearly vanished, millions of ordinary Iranians turned to cryptocurrency-not for speculation, but for survival. Today, crypto isn’t just an alternative in Iran; it’s the only functioning financial pipeline left. And the data shows it’s working, even if it’s messy, risky, and constantly under pressure.

Why the FATF Blacklist Hit Iran So Hard

The Financial Action Task Force doesn’t just list countries-it enforces consequences. When Iran was placed on the FATF blacklist, global banks were told: do not process any transactions tied to Iranian entities. No wire transfers. No correspondent banking. No access to the global financial system. This wasn’t a suggestion. It was a mandate.

The result? Iran’s banking ties collapsed. From 28 international banking relationships in 2018, the number dropped to just 3 by 2025. That’s not a glitch. That’s a shutdown. For regular people trying to pay for medicine, send money to family abroad, or buy basic goods, the doors slammed shut. And when the door to the traditional financial world closes, people find another way in.

Crypto Adoption Soared-Not Because It Was Cool, But Because It Was Necessary

In 2024, Iran accounted for $9.2 billion of the $15.8 billion in cryptocurrency transactions flowing into all sanctioned countries combined. That’s more than Russia, Venezuela, and North Korea put together. Why? Because Iranians had no other choice.

Centralized exchanges like Nobitex and Wallex saw transaction volumes jump 63% between January and December 2024. Monthly outflows went from $290 million to over $480 million. People weren’t trading for profit. They were converting their rials into Bitcoin to protect their savings from hyperinflation and to move money out of the country. Bitcoin made up 78% of these flows-not because it’s the most advanced, but because it’s the hardest to block.

Even Ethereum, with its smart contract capabilities, only made up 14%. Monero, the privacy coin, was used in just 5% of cases. That tells you something: Iranians aren’t looking for anonymity. They’re looking for access. They want to send value across borders without asking permission.

The Paradox: More Crypto, More Risk

Here’s the cruel twist: the very tools Iranians use to bypass sanctions also make them vulnerable.

Global exchanges like Binance and Bybit are required by FATF to follow the “travel rule”-which means collecting and sharing personal data on every transaction over $1,000. But Iran’s government also demands identity verification. So when an Iranian user signs up on Binance to send Bitcoin to Turkey, they’re giving their ID to two hostile systems: one that might freeze their account, and another that might arrest them.

Reddit user ‘TehranTrader’ lost $8,200 after Binance froze their account for three small transfers under $1,500. That’s not an outlier. A September 2025 survey of 14,200 Iranian users found that 33% had accounts frozen on global exchanges. Meanwhile, Iran’s Central Bank throttles internet traffic during peak crypto hours-8 to 10 PM-causing 74% of users to experience transaction failures.

The result? A fragmented, underground system. Most transactions now happen through mobile wallets like Trust Wallet and Exodus. Average transaction size dropped 40% since 2023-down to under $1,500-to avoid triggering monitoring flags. Users split large sums into dozens of small transfers. It’s not efficient. It’s not elegant. But it works.

How Iranians Are Bypassing the Blockades

The solutions aren’t coming from governments. They’re coming from users.

Peer-to-peer (P2P) trading on platforms like LocalBitcoins has a 78% success rate-but at a cost. Buyers pay an average 22% premium just to get Bitcoin in their wallet. That’s how much extra you pay when the system is broken.

Some users are turning to decentralized exchanges like PancakeSwap. Success rates are lower-63%-but they don’t require KYC. The trade-off? Slippage of 15% due to thin liquidity. Still, it’s better than getting your account locked.

Then there’s the underground network: atomic swaps, multi-hop transactions, and local P2P meetups. One user on Bitpin described moving 2.3 BTC to Turkey in 17 minutes using a custom-built swap protocol. No bank. No exchange. Just code and trust. The catch? These methods cost 15-20% more in fees and carry real security risks. 37% of users who downloaded unvetted tools from GitHub reported breaches or stolen funds.

The Government’s Half-Measures

Iran’s government hasn’t stayed silent. It launched its own “Halal Stablecoin” (HSC) in August 2025, pegged to gold. Over 4 million users transacted $280 million in the first month. Sounds promising? It is-until you realize it can’t interact with the outside world. Because of FATF, no foreign exchange can touch it. No international merchant accepts it. It’s a digital rial, trapped in a digital cage.

Iran also ratified two international anti-terrorism conventions in 2024 and 2025. But FATF hasn’t moved it off the blacklist. Why? Because those agreements don’t fix the core problem: Iran still doesn’t have the systems to monitor crypto transactions, trace illicit flows, or enforce AML rules on its own exchanges.

Experts like Dr. Emad Kiyaei argue this policy backfires. “The blacklist has become counterproductive,” he wrote in September 2025. “It didn’t stop crypto use-it made it the backbone of Iran’s economy.”

The Human Cost

Behind the numbers are real people.

A July 2025 case documented by the Iran Crypto Association showed 317 users losing $4.1 million when a UAE-based exchange, Rain, suddenly froze all Iranian accounts after FATF’s June statement. No warning. No appeal. Just gone.

New users spend an average of 72 hours learning how to manage seed phrases and secure wallets. 61% need help from someone else-because the interface is confusing, the risks are high, and the stakes are life-or-death. Many are elderly, trying to send money to grandchildren abroad. Others are small business owners buying parts for their factories.

And yet, 82% of surveyed users say crypto is “the only viable option.” That’s not a trend. That’s a resignation.

What Comes Next?

FATF predicts Iran’s crypto usage will hit 25 million users by 2027. Dr. Kiyaei’s model warns that if current policies continue, Iran’s entire crypto infrastructure could collapse by mid-2026 due to liquidity drying up. Exchanges will stop accepting Iranian users. Wallets will go dark. The system will break.

Right now, Iran’s crypto network is a fragile, high-pressure valve. It’s holding back a flood of desperation. But it’s not designed to last. It’s designed to survive.

The real question isn’t whether Iranians will keep using crypto. They already are. The question is: what happens when the last exchange shuts its doors to them? And who will be held responsible when the next generation has no financial safety net at all?