How the FATF Blacklist Is Reshaping Crypto Use in Iran

Iran’s economy has been cut off from the global financial system for years. Banks can’t send or receive money through SWIFT. Foreign companies won’t process payments. Even humanitarian aid gets stuck in bureaucratic limbo. In this vacuum, cryptocurrency didn’t just become popular-it became essential. And the FATF blacklist didn’t just make things harder. It turned crypto into Iran’s last lifeline to the outside world.

What the FATF Blacklist Actually Does to Iran

The Financial Action Task Force (FATF) doesn’t just issue warnings. When a country lands on its blacklist-officially called the ‘Call for Action’-it triggers real, global consequences. Banks everywhere are forced to treat any transaction linked to Iran as high-risk. Many refuse to process them at all. Iran’s access to the global banking network was already shrinking. By 2025, it had dropped from 28 correspondent banking relationships to just three. The FATF blacklist didn’t cause that collapse-it finished it.

This isn’t theoretical. European banks stopped processing payments to Iranian entities. Asian financial institutions tightened controls. Even third-party payment processors like PayPal and Wise blocked Iranian users. The result? Ordinary Iranians can’t pay for medical supplies, textbooks, or even basic software. Their savings are trapped. Their businesses can’t import raw materials. And that’s when crypto stepped in-not as a speculative asset, but as a survival tool.

Why Iranians Are Using Crypto More Than Ever

In 2024, Iran accounted for $9.2 billion of the $15.8 billion in cryptocurrency transactions flowing into all sanctioned countries. That’s more than Russia, Venezuela, and North Korea combined. It’s not because Iranians are day-trading Bitcoin. It’s because they have no other choice.

Centralized exchanges like Nobitex and Wallex are domestic platforms, but they’re trapped. They can’t send money abroad. So users convert their rials into Bitcoin or Ethereum, then move it offshore-to Binance, Bybit, or other international platforms. Monthly outflows from Iranian exchanges jumped from $290 million in January 2024 to over $480 million by December. That’s not speculation. That’s capital flight. That’s people trying to protect what little they have.

Bitcoin makes up 78% of these transactions. Why? Because it’s the most decentralized, hardest to block. Ethereum follows at 14%. Privacy coins like Monero are used too, but sparingly-mostly by those who know the risks. The average transaction size dropped to under $1,500. Why? To avoid triggering automated flags. People are breaking their money into small pieces, like pouring water through a cracked sieve, hoping some of it gets out.

The Catch: Every Move Is Tracked

Here’s the cruel irony: the same systems that let Iranians bypass sanctions also make them vulnerable.

Global exchanges like Binance are required by FATF to follow the ‘travel rule’-they must collect and share personal data on every transaction over $1,000. So when an Iranian user signs up, they provide their ID, phone number, and address. That data gets stored. And if Iranian authorities request it-and they do-those exchanges are forced to comply. Many Iranian users have had their accounts frozen after just a few small transfers. One Reddit user reported Binance locking his $8,200 account after three transactions under $1,500. That’s not a mistake. That’s policy.

And it’s not just exchanges. The Iranian government monitors internet traffic. You need a registered SIM card to access the web. Many users rely on apps like Soroush+, which try to hide their activity, but 41% of these tools get blocked anyway. Even using a non-custodial wallet like Trust Wallet doesn’t make you invisible. Your IP address, your device fingerprint, your transaction patterns-they’re all traceable.

How People Are Getting Around It (And What It Costs)

Some Iranians have found workarounds, but they’re risky and expensive.

Peer-to-peer (P2P) trading on platforms like LocalBitcoins works-but with a 22% premium. You pay more because sellers know you’re desperate. Decentralized exchanges like PancakeSwap are used too, but liquidity is thin. Slippage hits 15%, meaning you lose value just by trading. And even these aren’t foolproof. In July 2025, a UAE-based exchange called Rain shut down all Iranian accounts overnight after FATF issued a public warning. 317 people lost $4.1 million.

The most promising alternative? Localized networks. One group in Shiraz built a peer-to-peer system using atomic swaps-direct, trustless trades between wallets-that bypasses exchanges entirely. One user moved 2.3 BTC to Turkey in 17 minutes without KYC. But these systems are small, unofficial, and often untested. Security breaches are common. A GitHub project called ‘IranCryptoKit’ helps users bypass government firewalls, but 37% of users who downloaded it reported malware or stolen keys.

The Human Cost of Financial Isolation

Behind the numbers are real people.

A teacher in Tabriz uses crypto to buy English textbooks for her students. A small business owner in Mashhad imports medical equipment using Bitcoin because no bank will touch his payment. A family in Isfahan sends money to relatives in Turkey to pay for cancer treatment. These aren’t criminals. They’re ordinary people trying to live.

A September 2025 survey by the Iran Crypto Association found 82% of users said crypto was their ‘only viable option’ for international transactions. But 68% said they no longer trusted the exchanges they used. The system is unreliable. Transactions fail. Accounts vanish. Support teams take 14 hours to respond-when they respond at all.

And yet, adoption keeps growing. In 2025, 18.7 million Iranians-42% of the adult population-are using cryptocurrency. That’s more than the population of Canada. It’s not a trend. It’s a necessity.

What’s Next? A System on the Brink

Iran’s Central Bank launched a gold-backed ‘Halal Stablecoin’ in August 2025. 4.2 million people used it in its first month, transacting $280 million. But it’s still trapped inside Iran. No foreign exchange can touch it. It doesn’t solve the core problem: isolation.

FATF insists it’s enforcing global standards. But critics argue the blacklist is backfiring. Dr. Emad Kiyaei, a sanctions expert, wrote in September 2025 that ‘the blacklist has become counterproductive’-it’s accelerating crypto adoption without reducing the risks it was meant to stop.

If nothing changes, projections suggest Iran’s crypto usage could hit 25 million users by 2027. But if global exchanges keep freezing accounts and liquidity dries up, there’s a 60% chance the system could collapse by mid-2026. People won’t lose money-they’ll lose hope.

Can This Be Fixed?

Iran has taken small steps. It ratified two international anti-terrorism treaties in 2024 and 2025. But FATF hasn’t responded. It won’t say whether these measures are enough. That silence is the real punishment.

There’s no easy fix. Lifting the blacklist without real reforms would undermine global financial security. But keeping it in place is forcing millions of ordinary people into a dangerous, unregulated underground economy.

Right now, crypto isn’t a luxury for Iranians. It’s a lifeline. And the world’s financial regulators are watching it fray.