How Sanctions Increase Crypto Adoption in War Zones

Economic sanctions and wartime restrictions usually hit the same pressure points: banks, payment networks, trade finance, and foreign exchange access. When those choke points tighten, both governments and civilians in conflict zones search for workarounds that are fast, hard to censor, and available globally—exactly the properties crypto offers.

Sanctioned jurisdictions received about 15.8 billion dollars’ worth of cryptocurrency in 2024, representing roughly 39% of all illicit crypto transactions worldwide, a figure heavily driven by Iran and Russia under sanctions pressure. That volume illustrates a broader trend: rather than stopping value flows, sanctions are partially rerouting them onto blockchains and into stablecoins, exchanges, and DeFi protocols.

Key Drivers of Crypto Adoption in Sanctioned War Zones

Several overlapping dynamics explain why crypto adoption spikes when sanctions hit an active conflict zone.

Loss of access to global banking.

Once a country’s banks are cut off from SWIFT or foreign correspondent banks, international wires, card payments, and trade finance become unreliable or impossible, so businesses and individuals turn to crypto rails for imports, remittances, and savings.

Capital flight and currency collapse.

Sanctions often trigger inflation, devaluation, and capital controls; residents respond by moving value into Bitcoin, stablecoins, or other digital assets to escape local currency risk and withdrawal limits.

Need for cross‑border payments at scale.

NGOs, diaspora communities, and informal trade networks use stablecoins and crypto exchanges to move money into and out of war zones where cash logistics and banking infrastructure are disrupted.

State‑level sanctions evasion.

Sanctioned governments and their proxies experiment with mining, state‑linked exchanges, and on‑chain payment networks to pay suppliers, fund operations, or sell commodities outside the reach of Western banks.

Censorship resistance and neutrality.

Public blockchains do not care about nationality or political alignment, which makes them attractive in polarized conflicts where one side controls banking rails and weaponizes access to fiat liquidity.

Case Studies: Russia, Ukraine, Iran, and Non‑State Actors

Concrete examples from recent conflicts show how sanctions and war combine to accelerate crypto usage.

Russia and Ukraine under wartime sanctions.

After Russia faced sweeping sanctions over its invasion of Ukraine, crypto inflows into the wider Eastern European region surged, with Russia and Ukraine both ranking among the top global adopters by 2024. Chainalysis data shows Russia leading Eastern Europe with over 180 billion dollars in crypto inflows and Ukraine following with over 100 billion dollars, as both sides used digital assets for donations, remittances, and business payments under disrupted banking conditions.​

Iran’s growing crypto ecosystem.

Iran’s long‑running sanctions have produced a robust crypto sector; centralized exchanges in the country saw outflows jump to over 4 billion dollars in 2024, with volumes rising again in 2025 as economic uncertainty deepened. This activity combines capital flight by ordinary users with state‑linked mining and exchange operations, some of which have been connected to regional proxy groups and sanctioned entities.

Non‑state groups and proxy networks.

Investigations have documented how actors such as the Houthis in Yemen and other sanctioned organizations receive or move funds via crypto, especially as sanctions tighten and traditional channels close. These flows are often relatively small compared to overall war financing but demonstrate how easily borderless digital assets plug into conflict economies.

Other sanctioned theaters.

In places like Syria and Afghanistan, adoption is more limited due to infrastructure damage and weak connectivity, but there is evidence of targeted use for cross‑border transfers and sanctions circumvention when conditions allow.​

How Exactly Crypto Works Around Sanctions

To understand why sanctions unintentionally boost crypto adoption, you need to look at the technical and regulatory architecture of digital assets.

Decentralized, permissionless settlement.

Bitcoin, Ethereum, and similar networks do not rely on correspondent banks or centralized clearing houses, so transactions can settle globally even when fiat rails are blocked by sanctions.

Stablecoins as synthetic dollar access.

Dollar‑pegged tokens like USDT and USDC function as offshore digital cash, giving sanctioned users exposure to dollar value without a U.S. bank account, though issuers can freeze blacklisted addresses.

Mining as “energy‑to‑finance” conversion.

Resource‑rich, sanctioned states can monetize cheap energy by mining Bitcoin or other PoW coins, turning electricity and hydrocarbons into liquid digital assets they can move abroad.

Use of mixers, bridges, and multi‑chain routing.

To obscure flows, some sanctioned actors rely on mixing services, cross‑chain bridges, and multiple networks like TRON and Ethereum, which complicates tracing and compliance.

Emergence of sanctions‑resistant infrastructure.

As compliance tightens in regulated exchanges, users shift to offshore platforms, P2P markets, and DeFi protocols, creating a parallel financial system less tied to traditional enforcement levers.

Risks, Limits, and Regulatory Response

While crypto offers powerful tools for populations and governments under sanctions, its role has clear ceilings and introduces new risks.

Scaling constraints for large‑volume trade.

On‑chain liquidity, volatility, and compliance screening make it difficult to replace the full scale of traditional trade finance, especially for bulk commodities and complex supply chains.

Traceability and exposure.

Public blockchains give investigators unprecedented visibility; firms using advanced analytics have traced flows from sanctioned states and groups, enabling targeted enforcement even without banks.

Regulatory backlash and reputational damage.

Sanctions‑driven adoption-especially the 39% share of illicit crypto linked to sanctioned jurisdictions-heightens political pressure for strict regulation, exchange de‑risking, and stablecoin blacklisting.

Uneven access within war zones.

Connectivity, smartphone penetration, and digital literacy vary widely, so benefits often accrue to urban, connected users, while the poorest communities still rely on cash and informal systems.​

These limits mean crypto complements, rather than fully replaces, traditional sanctions evasion and war‑economy financing strategies, even as it becomes a critical piece of the puzzle.