In the UK, the Financial Services and Markets Act 2000 (FSMA) (as amended by the Financial Services and Markets Act 2023) defines cryptoassets as “any cryptographically secured digital representation of value or contractual rights that— (a) can be transferred, stored or traded electronically, and (b) that uses technology supporting the recording or storage of data (which may include distributed ledger technology).” They are also sometimes referred to as digital assets or virtual assets. Cryptoasset services are explicitly sanctioned by the EU, particularly in light of the October 2025 19th Russia Sanctions package. Since 2018, OFAC in the US has stated that sanctions apply to virtual currency and now designations extend to wallet addresses, exchanges, mixers and developers. Providing support or facilitation also amounts to a sanction breach. US secondary sanctions also mean that non-US Crypto companies fall within the scope of OFAC penalties.
Importantly, financial sanctions regulations do not differentiate between cryptoassets and other forms of assets. Financial sanctions regulations therefore apply to cryptoassets in the same way they do to other forms of assets. In the UK, the use of cryptoassets to circumvent financial sanctions is a criminal offence under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018.
A report by Chainalysis dated 5 March 2026 reported that the value of cryptoassets received by sanctioned entities surged 694% in 2025, driving total illicit transaction volume to a record $154 billion as nation-state actors integrated crypto into their national financial infrastructure and strategic policy objectives. It is no surprise therefore that OFSI announced at the start of this year that it is working closely with UK law enforcement and regulatory partners to tackle the abuse of cryptoassets and associated money laundering activities. Recently, OFSI joined forces with the Crypto Cash Fusion Cell (CCFC) to target criminal funds linked to sanctions offences.
Whilst sanctions against Russia have dominated the global political landscape since 2022, Iran has a long and established track record of using cryptocurrency to circumvent financial sanctions. Even before the Iran conflict started at the end of February 2026, the Iranian state has been known to use cryptocurrencies to evade sanctions. Chainalysis has reported that Iranian crypto activity has been increasingly dominated by the state, with the Islamic Revolutionary Guard Corps (IRGC) and its proxy networks accounting for over 50% of value received in Q4 2025, for a total of over $3 billion in transfers throughout the year.
Crypto used for payments in the trading of physical commodities, in shipping and trade finance are particular areas of focus for sanctions exposure particularly in light of the commonly held and incorrect view that crypto payments bypass sanctions rules. The EU has indicated that crypto usage in oil trading can in certain situations amount to wilful circumvention (EC press release 23 October 2025). Shipping companies will face new compliance risks if Iran’s plans to charge a toll in cryptocurrency in the Strait of Hormuz comes to fruition.
In any event, companies across all industries should take note of multi-jurisdictional compliance challenges as crypto’s role in global trade grows and as sanctions enablers increasingly use cryptoassets as a tool to move and hide illicit funds. Crypto should be considered a high-risk area for sanctions. Regulators and those engaged in sanctions enforcement actions will look at facilitators, enablers, agents and end users.
Importantly, financial sanctions regulations do not differentiate between cryptoassets and other forms of assets. Financial sanctions regulations therefore apply to cryptoassets in the same way they do to other forms of assets. In the UK, the use of cryptoassets to circumvent financial sanctions is a criminal offence under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018.
A report by Chainalysis dated 5 March 2026 reported that the value of cryptoassets received by sanctioned entities surged 694% in 2025, driving total illicit transaction volume to a record $154 billion as nation-state actors integrated crypto into their national financial infrastructure and strategic policy objectives. It is no surprise therefore that OFSI announced at the start of this year that it is working closely with UK law enforcement and regulatory partners to tackle the abuse of cryptoassets and associated money laundering activities. Recently, OFSI joined forces with the Crypto Cash Fusion Cell (CCFC) to target criminal funds linked to sanctions offences.
Whilst sanctions against Russia have dominated the global political landscape since 2022, Iran has a long and established track record of using cryptocurrency to circumvent financial sanctions. Even before the Iran conflict started at the end of February 2026, the Iranian state has been known to use cryptocurrencies to evade sanctions. Chainalysis has reported that Iranian crypto activity has been increasingly dominated by the state, with the Islamic Revolutionary Guard Corps (IRGC) and its proxy networks accounting for over 50% of value received in Q4 2025, for a total of over $3 billion in transfers throughout the year.
Crypto used for payments in the trading of physical commodities, in shipping and trade finance are particular areas of focus for sanctions exposure particularly in light of the commonly held and incorrect view that crypto payments bypass sanctions rules. The EU has indicated that crypto usage in oil trading can in certain situations amount to wilful circumvention (EC press release 23 October 2025). Shipping companies will face new compliance risks if Iran’s plans to charge a toll in cryptocurrency in the Strait of Hormuz comes to fruition.
In any event, companies across all industries should take note of multi-jurisdictional compliance challenges as crypto’s role in global trade grows and as sanctions enablers increasingly use cryptoassets as a tool to move and hide illicit funds. Crypto should be considered a high-risk area for sanctions. Regulators and those engaged in sanctions enforcement actions will look at facilitators, enablers, agents and end users.
