How the FATF Blacklist Is Reshaping Crypto Use in Iran

When the world cuts you off, crypto becomes your only lifeline

In 2019, Iran was placed on the FATF blacklist-a list of countries deemed too risky for the global financial system. Since then, Iranian banks have been cut off from SWIFT, international wire transfers have collapsed, and foreign banks refuse to touch any transaction linked to Iran. For ordinary people, this meant no access to PayPal, no way to pay for online services, no way to receive money from family abroad, and no way to buy essentials like medicine or spare parts for medical equipment. The result? Millions turned to cryptocurrency-not because they loved Bitcoin, but because they had no other choice.

By 2024, Iran accounted for nearly $9.2 billion of the $15.8 billion in crypto transactions flowing into all sanctioned countries. That’s more than Russia, Venezuela, and North Korea combined. It’s not a trend. It’s a survival mechanism.

Why the FATF blacklist hit Iran harder than any sanctions before

The FATF (Financial Action Task Force) isn’t just a warning label. When a country lands on its blacklist, global banks are legally required to treat any transaction involving that country as high-risk. That means freezing accounts, rejecting payments, and even shutting down entire branches that have ever dealt with Iranian entities. By 2025, Iran had only three correspondent banking relationships left-down from 28 in 2018. That’s not a slowdown. That’s a complete shutdown of the financial system.

Before the blacklist, Iranians could still use international payment processors like Western Union or Wise. Now? Those services are blocked. Even sending $50 to a relative in Turkey requires jumping through 10 different hoops. So people started using crypto. Not as an investment. Not as speculation. As a payment network.

How Iranians are using crypto: Bitcoin, privacy coins, and P2P networks

Bitcoin is the backbone. It makes up 78% of all crypto transactions from Iran. Why? Because it’s decentralized. No bank can shut it down. No government can freeze a Bitcoin wallet unless they physically seize the device holding the private keys.

Ethereum makes up 14% of transactions, mostly for smart contracts and tokenized goods. Then there’s Monero-5% of the total. It’s not popular because it’s trendy. It’s popular because it hides transaction details. If you’re trying to buy a medical device from Turkey and don’t want your name flagged by Iranian authorities, Monero is the only option.

But here’s the catch: Iranian users can’t just sign up for Binance or Coinbase. Those platforms are required by FATF to collect personal info under the “travel rule.” So when Iranians try to verify their identity, they’re handing over data that could land them in trouble with their own government. Many report their accounts getting frozen after just a few small transactions. One Reddit user in Tehran lost $8,200 after three transfers under $1,500-each one perfectly legal under FATF’s own rules, but flagged anyway.

So people moved to peer-to-peer (P2P) networks. Platforms like LocalBitcoins and local Telegram groups let Iranians trade directly with users in Turkey, the UAE, and Pakistan. Success rates are around 78%, but there’s a cost: premiums of 15-22% on top of market price. That’s how much extra you pay just to get money out of the country.

The paradox: More crypto use = more risk

It’s a double-edged sword. The same tools that help Iranians bypass sanctions also make them targets.

On one side, Iranian authorities monitor crypto activity closely. All internet users must register their SIM cards. The government tracks IP addresses. Apps like Soroush+ help users hide their location, but 41% of them still get blocked. The Central Bank has even started fining people who use crypto to import goods that are legally banned.

On the other side, global exchanges are terrified of violating U.S. or EU sanctions. In September 2025, the UAE-based exchange Rain froze 317 Iranian accounts overnight, wiping out $4.1 million in total. No warning. No explanation. Just a message: “Your account has been suspended due to regulatory compliance.”

And then there’s the tech barrier. Most Iranians don’t know how to manage a seed phrase. A survey by the Iran Blockchain Academy found that 61% of new users needed help setting up a wallet-and many lost funds because they wrote down their recovery phrase wrong or stored it on a phone that got stolen.

What’s being done? Halal Stablecoins and underground networks

In August 2025, Iran’s Central Bank launched a “Halal Stablecoin” (HSC), pegged to gold. It’s designed to work inside Iran, for local payments and to avoid U.S. dollar dependency. In its first month, 4.2 million people used it to move $280 million. Sounds promising? It is-until you realize it can’t connect to the outside world. Because of FATF rules, no international exchange will touch it. No foreign bank will accept it. It’s a digital currency trapped behind a digital wall.

Meanwhile, grassroots solutions are thriving. GitHub has a project called “IranCryptoKit” with over 2,300 stars. It’s a collection of open-source tools that help users bypass national firewalls, run local nodes, and route transactions through multiple countries. But here’s the problem: 37% of users who downloaded these tools reported security breaches. Someone built a fake version. Someone stole private keys. No one’s auditing them.

Who’s really winning? No one

The FATF says its goal is to stop money laundering and terrorist financing. But in Iran, the result is different. The blacklist didn’t stop illicit activity. It forced it underground. It didn’t reduce crypto use. It made it essential.

Chainalysis data shows that 78% of Iran’s crypto activity now serves as a sanctions evasion tool. Of that, 61% helps pay for imported goods-food, medicine, car parts-that are blocked by sanctions. This isn’t drug money. This is a family buying insulin. A factory repairing a water pump. A student paying for an online course.

And yet, FATF hasn’t budged. Even after Iran ratified two international anti-terrorism conventions in 2024 and 2025, the organization hasn’t removed it from the list. Experts like Dr. Emad Kiyaei argue the blacklist has become counterproductive. “It’s accelerating crypto adoption without reducing risk,” he wrote. “It’s turning a financial tool into a national necessity.”

Meanwhile, Iranian users are stuck. They can’t go back to banks. They can’t fully trust exchanges. They can’t rely on government solutions. They’re using apps that might get hacked, paying premiums that eat into their savings, and risking arrest just to buy groceries.

The future: 25 million users by 2027-or collapse?

By 2027, FATF predicts more than 25 million Iranians will be using crypto regularly. That’s more than half the adult population. It’s not a prediction. It’s an inevitability.

But there’s another scenario. If global exchanges keep freezing accounts, if liquidity dries up, if P2P premiums climb past 30%, then the system could break. People will lose faith. They’ll stop sending money out. They’ll stop buying in. And what happens when a family can’t get insulin because the crypto network collapsed?

Right now, crypto in Iran isn’t about wealth. It’s about survival. And the world is watching-but not helping. The FATF didn’t design this outcome. But it’s the only one that’s real.