When a country is hit with international sanctions, banking systems often shut down. Wire transfers freeze. Credit cards stop working. For ordinary people trying to buy food, pay for medicine, or send money to family abroad, the world cuts off. But in places like Iran, Russia, and North Korea, a quiet digital lifeline remains: cryptocurrency.
It’s not magic. It’s not illegal by design. It’s simply the result of people using technology that doesn’t care about borders. While governments try to block access, citizens find ways around-using tools, networks, and loopholes that weren’t built for evasion but work perfectly for it.
Why Crypto Works When Banks Fail
Sanctioned countries don’t lack access to the internet. They lack access to the global financial system. SWIFT is blocked. Visa and Mastercard are cut off. Local banks can’t receive dollars or euros. But crypto? It runs on a public ledger. No permission needed. No bank account required. All you need is a phone, a Wi-Fi signal, and a wallet address.
Bitcoin, Ethereum, and stablecoins like USDT and DAI became the new cash. In Iran, where inflation hit 50% in 2024, people stopped trusting the rial. They started buying Bitcoin. In Russia, after Western sanctions froze central bank assets in 2022, crypto became a way to preserve wealth. Even in North Korea, where the government itself is sanctioned, hackers use crypto to fund operations-earning them the title of the most sanctioned nation for crypto-related activity by OFAC in 2024.
How They Get In: The Three Main Paths
There’s no single way. But three methods dominate:
- Peer-to-peer (P2P) platforms - Sites like LocalBitcoins, Paxful, and regional P2P apps let users trade directly. One person in Iran sends rials to a seller’s bank account. The seller sends Bitcoin to the buyer’s wallet. No exchange involved. No KYC. Just trust and speed.
- Decentralized exchanges (DEXs) - Uniswap, Curve, and PancakeSwap don’t ask for ID. You connect a wallet-MetaMask, Trust Wallet-and swap tokens. No registration. No logins. Even if your IP is blocked, you can use a VPN and still trade.
- Successor exchanges - When an exchange like Garantex gets shut down by OFAC and the U.S. Secret Service, it doesn’t disappear. It moves. Its users, funds, and code get transferred to a new platform-Grinex, Exved, or MKAN Coin. These new platforms operate from Dubai, Singapore, or even servers in Eastern Europe, where enforcement is weaker.
These aren’t just workarounds. They’re evolving systems. Each time regulators act, users adapt faster.
The Stablecoin Shuffle: From USDT to DAI
In July 2025, Tether froze 42 wallet addresses linked to Nobitex, Iran’s largest crypto exchange. Over $150 million in USDT was locked. Panic spread. People who had saved their life savings in USDT suddenly couldn’t access it.
But they didn’t give up.
Within 72 hours, Iranian crypto influencers, Telegram channels, and even government-aligned media pushed a new plan: swap USDT for DAI on the Polygon network. Why? Because DAI is decentralized. It’s not controlled by a single company like Tether. And Polygon’s low fees made it cheap to move.
The result? A mass migration. Within weeks, DAI became the most traded stablecoin in Iran. USDT usage dropped 40%. This wasn’t a glitch. It was a lesson: if one stablecoin is blocked, users will switch to another. And if that one gets targeted? They’ll find a third.
How Exchanges Get Around Sanctions
It’s not just users. Exchanges are getting smarter too.
ShapeShift, a Swiss-based exchange, paid $750,000 to OFAC in 2025 for letting users from Cuba, Iran, Sudan, and Syria trade on its platform. Why? Because it had no compliance system. No IP blocking. No KYC checks. It was built for privacy-but that made it perfect for sanctioned users.
Other exchanges now use clever tricks:
- Hosting servers in countries with no extradition treaties
- Using offshore companies in the UAE or Malta to register
- Operating under multiple brand names so if one gets blocked, another takes over
- Accepting crypto payments for subscriptions instead of fiat
Even when a domain is seized-like Garantex’s in March 2025-the customer base survives. Users keep their wallet addresses. They just switch to a new site with the same interface. The money? It’s already moved to cold storage or locked in DeFi pools.
The Role of DeFi and Mixers
Decentralized finance (DeFi) is the wild west of crypto access. No central server. No company to shut down. Just smart contracts.
In January 2025, OFAC made history by sanctioning a DeFi protocol-freezing $150 million in assets. But the protocol kept running. Why? Because no one owns it. It’s code on a blockchain. You can’t arrest a contract.
Then there are mixers-services that scramble transaction trails. Tornado Cash was one. After being sanctioned, users flocked to alternatives like Blender.io, Nucleo, and RenVM. These tools aren’t just for criminals. For ordinary people in Iran or Venezuela, they’re the only way to hide the source of their crypto from government monitors or foreign regulators.
OFAC tracked over $6.9 billion in illicit crypto transactions linked to sanctioned entities over two years. That’s not all from hackers. A big chunk? From people just trying to survive.
Where They Go Next: Crypto-Friendly Havens
Sanctioned citizens don’t just use crypto. They use it to move money out.
Singapore has no capital gains tax. UAE (Dubai) offers zero tax on personal crypto income. Malta and Estonia have clear, business-friendly crypto laws. So when someone in Russia sells Bitcoin, they often send the proceeds to a wallet in Dubai. From there, they can cash out via local ATMs, peer-to-peer traders, or even crypto-friendly banks that don’t ask too many questions.
El Salvador’s move to make Bitcoin legal tender didn’t just help its own citizens. It gave others a model: if the state accepts crypto, then maybe the world will too.
Even in countries like Turkey and Thailand, where crypto is regulated but not banned, people from sanctioned nations use local P2P networks to cash out. The system is global. The rules? Patchy.
The Human Side: Real Stories
One teacher in Tehran told a journalist she used crypto to send $200 to her sister in Germany. The bank transfer was denied. The crypto transfer? Took 12 minutes. No fees. No questions.
A small business owner in Moscow used Bitcoin to pay for medical equipment from a supplier in India. The payment cleared in hours. A traditional wire would’ve taken weeks-and likely been blocked.
These aren’t criminals. They’re parents, doctors, farmers, engineers. They’re not trying to fund war. They’re trying to live.
What Governments Are Doing About It
OFAC has sanctioned 57 individuals and entities for crypto-related activity as of 2025. Penalties on crypto firms hit $430 million in 2024-a 40% jump from 2023. INTERPOL and Europol now work with crypto analytics firms like TRM Labs and Chainalysis to trace flows.
Iran responded with its own move: in August 2025, it passed a law taxing crypto profits. Now, trading Bitcoin is treated like gambling or real estate speculation. It’s not meant to stop crypto. It’s meant to control it. To track it. To tax it.
But enforcement has limits. You can’t block every VPN. You can’t arrest every wallet. And you can’t shut down a blockchain.
The Arms Race Isn’t Over
Every time regulators freeze a wallet, users find a new one. Every time an exchange gets shut down, a new one rises. Every time a stablecoin is restricted, another one takes its place.
OFAC’s annual growth in crypto sanctions is 18%. That means more tools, more pressure, more tracking.
But the users? They’re growing faster.
There’s no perfect solution. No magic bullet. Crypto isn’t designed to bypass sanctions. But it doesn’t need to be. It just needs to work-and it does.
For now, the people in sanctioned countries aren’t waiting for permission. They’re building their own financial system-one transaction at a time.
Can you really use crypto if your country is sanctioned?
Yes. Even under heavy sanctions, people use peer-to-peer trading, decentralized exchanges, and stablecoins like DAI to move money. No central authority controls the blockchain, so as long as you have internet access, you can trade crypto. Tools like VPNs and wallets make it possible to bypass most restrictions.
What’s the safest crypto to use in a sanctioned country?
Bitcoin is the most widely accepted, but stablecoins like DAI are often safer. Unlike USDT, which is controlled by Tether and can freeze wallets, DAI is decentralized and runs on the Ethereum and Polygon networks. It’s harder to block, and it maintains its value better under pressure. Many users in Iran and Russia switched to DAI after USDT freezes in mid-2025.
Do crypto exchanges know if someone is from a sanctioned country?
Some do, if they require KYC (like Binance or Coinbase). But many don’t. Decentralized exchanges (DEXs) like Uniswap don’t ask for ID. P2P platforms let users trade without registration. Even centralized exchanges with weak compliance-like ShapeShift in 2025-have allowed users from sanctioned countries to trade because they lacked proper screening systems.
Why do governments keep sanctioning crypto if it doesn’t stop it?
Sanctions aren’t meant to completely stop crypto use-they’re meant to raise the cost and risk. Freezing wallets, fining exchanges, and blacklisting addresses makes it harder and more expensive to move money. It deters large-scale operations and pushes users toward riskier, less reliable methods. It’s not about total prevention. It’s about damage control.
Is using crypto in a sanctioned country illegal?
It depends. In most cases, the individual user isn’t breaking their own country’s laws-many governments actually encourage crypto use as a way to bypass Western financial control. But using crypto to trade with sanctioned entities (like North Korean hackers or Russian arms dealers) could violate international law. For ordinary people buying food or sending money home, enforcement is rare.
What happens if a stablecoin like USDT freezes my funds?
If Tether freezes your USDT, you lose access to that specific token. But you can still swap it for another asset-like DAI or WBTC-on a decentralized exchange. The blockchain doesn’t care who owns what. As long as you control your private keys, you can move your funds elsewhere. Many users in Iran did exactly this after the July 2025 freeze, shifting to DAI on Polygon.
Can blockchain analytics track sanctioned users?
Yes. Firms like Chainalysis and TRM Labs track wallet movements and flag addresses linked to sanctioned entities. OFAC has over 1,200 crypto wallet addresses on its SDN list. But tracking doesn’t mean stopping. Users use mixers, multi-hop swaps, and new wallets to obscure their trail. It’s a constant game of cat and mouse.