Countries targeted by U.S. government sanctions have seen a notable increase in illicit cryptocurrency activities. Last year, these nations amassed nearly $16 billion in digital assets, accounting for approximately 39% of all illicit token transactions, as reported by the analytics firm Chainalysis.

In 2024, there was a marked rise in sanctions-related activity from these nations, primarily Iran, surpassing that of individuals. Chainalysis stated:

“As Western restrictions tighten, sanctioned nations are turning to cryptocurrencies and alternative financial systems to sustain trade and access capital.”

The report highlighted the financial transactions from sanctioned countries with partners like China and India, utilizing payment methods that do not involve U.S. dollars.

Furthermore, it noted:

“While cryptocurrency use in sanctioned jurisdictions may be associated with illicit state-controlled finance, it also represents an important financial lifeline for ordinary citizens facing economic hardship under restrictive regimes.”

Last year, the U.S. Treasury’s Office of Foreign Assets Control issued 13 sanctions that included cryptocurrency addresses. While this number decreased from previous years, it remains significantly high as the current administration may adopt a different stance towards digital assets.

The crypto-mixing service Tornado Cash faced scrutiny in 2023 but continued to process vast amounts of crypto transactions in 2024. It was reported that over 24% of its total inflows in that year were associated with stolen funds.

Additionally, the report underscored the situation in Iran:

“Iran’s government maintains extensive control over the country’s financial system, including cryptocurrency infrastructure. For many Iranians, cryptocurrency represents an alternative financial system…”