Countries under U.S. sanctions, including Iran, Russia, and North Korea, have sharply increased their use of cryptocurrencies to circumvent international financial sanctions, pushing related transaction volumes above $100 billion (about 153 trillion won) last year, data showed.
On the 4th, the Wall Street Journal (WSJ) reported, citing data from Blockchain analytics firm Chainalysis, that funds received last year by cryptocurrency addresses linked to U.S. sanctions targets were estimated to have surpassed $100 billion. That is about eight times higher than the previous year.
The WSJ analyzed that, because it is difficult to verify the identities of transaction counterparties and cryptocurrencies do not need to pass through the traditional banking system, sanctioned countries are actively using them as a means to evade sanctions.
Iran is known to have received payments for oil sales from China, its largest crude importer, by using domestic and overseas cryptocurrency exchanges centered on the Islamic Revolutionary Guard Corps (IRGC).
Russia, excluded from the international financial network after the war in Ukraine, expanded its use of cryptocurrencies to bypass sanctions. Promsvyazbank, a Russian state-run bank under sanctions, and Ilan Shor, a businessman from Moldova, issued a ruble-linked token, "A7A5," last year and used it for overseas payments.
According to Bloomberg, funds that exchanged A7A5 for stablecoins were also found to have been used to pay a Chinese drone company. Last year's transaction volume for the token is estimated at more than $90 billion.
Russia also reportedly used cryptocurrencies to pay the wages of sailors who smuggle sanctioned crude.
Western authorities believe North Korea has used cryptocurrencies stolen through cybercrimes such as hacking to purchase fuel and military equipment.
Hamas, the Palestinian armed faction designated by the United States as a terrorist organization, was also found to have received cryptocurrency donations via Telegram and other channels. The Federal Bureau of Investigation (FBI) confirmed the group's fundraising methods through an informant, the WSJ said.
The United States is also tightening enforcement to block sanctions evasion. In recent years, it has seized cryptocurrency wallets used by sanctioned countries and terrorist organizations or sanctioned exchanges, and in May it sanctioned four exchanges, including Nobitex, Iran's largest cryptocurrency exchange. U.S. Treasury Secretary Scott Bessent said the United States seized $1 billion worth of cryptocurrency from Iran.
However, experts noted that because the cryptocurrency ecosystem is evolving rapidly and regulatory levels vary by country, it will not be easy to completely block evasion.
Caitlin Martin, a senior intelligence analyst at Chainalysis, said, "Cryptocurrencies have fundamentally changed the contours of sanctions evasion."
Ari Redbord, head of policy at TRM Labs, which tracks Iranian cryptocurrency exchanges, said, "The Iranian crypto platforms that were recently sanctioned by the United States are just the most visible nodes," adding, "Taking them down does not dismantle the structure beneath."