Washington expands Iran sanctions to digital asset platforms

The United States Treasury has taken a landmark step in its Iran sanctions program by targeting cryptocurrency exchanges for the first time. On Friday, the Treasury Department announced sanctions against two UK-registered crypto platforms accused of playing a role in Iran’s financial network, signaling a tougher stance on the use of digital assets to bypass international restrictions.

The move reflects growing concern in Washington that cryptocurrencies and stablecoins are being used by sanctioned states to move funds outside traditional banking systems. Officials say the action is part of a broader effort to cut off financial channels used by Iranian authorities and affiliated groups.

UK-registered exchanges accused of handling IRGC-linked funds

The Office of Foreign Assets Control, or OFAC, designated Zedcex Exchange Ltd. and Zedxion Exchange Ltd., both registered in the United Kingdom. According to the Treasury, the two exchanges are connected to Iranian businessman Babak Morteza Zanjani and have processed substantial transaction volumes linked to entities associated with Iran’s Islamic Revolutionary Guard Corps.

OFAC said Zedcex alone has handled more than $94 billion in transactions since its registration in 2022. US officials allege that parts of this activity involved networks supporting the IRGC, which Washington has long designated as a terrorist organization.

In its statement, the Treasury said this action marks the first time a digital asset exchange has been sanctioned for operating within the financial sector of Iran’s economy. The designation effectively blocks the exchanges from accessing the US financial system and prohibits American individuals and companies from doing business with them.

Sanctions also target Iranian officials and business figures

Alongside the crypto exchanges, OFAC sanctioned several senior Iranian figures as part of the same enforcement package. Among them was Eskandar Momeni Kalagari, Iran’s minister of the interior, who oversees the country’s Law Enforcement Forces.

US authorities accuse these forces of violently suppressing protests and engaging in widespread intimidation. Treasury Secretary Scott Bessent said the United States would continue to pursue Iranian networks and elites who enrich themselves while ordinary citizens face economic hardship and political repression.

Babak Zanjani was also designated in the new round of sanctions. Zanjani is a high-profile Iranian businessman who was previously convicted of embezzling billions of dollars in oil revenues from Iran’s national oil company. According to the Treasury, he was later released from prison and subsequently used by the Iranian state to help move and launder funds.

US officials claim Zanjani provided financial support to projects linked to the IRGC, using complex structures and alternative financial channels to obscure the origin and destination of funds.

Treasury warns of crypto use to bypass sanctions

Bessent accused Tehran of diverting oil revenues toward weapons programs and militant proxies rather than supporting its population. He said digital assets have become an increasingly attractive tool for sanctioned regimes seeking to move money outside the reach of traditional oversight.

The Treasury warned that it will continue to monitor and disrupt networks that use cryptocurrencies to evade restrictions or finance illicit activity. Officials stressed that the sanctions are not aimed at the crypto industry as a whole, but at specific actors accused of facilitating sanctioned conduct.

The decision is likely to raise questions among crypto firms operating internationally, particularly those registered in jurisdictions outside the United States but serving a global user base. Compliance experts say the move underscores the need for exchanges to closely monitor counterparties and transaction flows.

Iran’s reported use of stablecoins draws scrutiny

The sanctions come amid growing attention on Iran’s reported use of stablecoins during periods of economic stress. Last week, blockchain analytics firm Elliptic reported that Iran’s central bank accumulated more than $500 million worth of Tether’s USDt during a sharp decline in the value of the rial.

According to Elliptic, the accumulation took place as the Iranian currency lost roughly half its value over eight months. The firm suggested that the central bank may have used USDt to support the rial or to settle international trade, mirroring traditional market interventions through crypto-based channels.

Elliptic said the activity appeared to involve local exchange Nobitex, where USDT was allegedly used to buy rials. The findings have intensified concerns among Western officials that stablecoins can be used by sanctioned states to manage currency pressures and access global liquidity.

A signal of tougher enforcement ahead

By extending sanctions to crypto exchanges, the US Treasury has sent a clear signal that digital asset platforms are not beyond the reach of sanctions enforcement. Analysts say the move could set a precedent for future actions against exchanges and service providers accused of facilitating transactions for sanctioned countries or groups.

As cryptocurrencies continue to integrate into global finance, regulators are likely to face growing pressure to balance innovation with enforcement. For now, Washington’s message is clear: digital assets will not provide a safe haven for those seeking to evade international sanctions.