TRM Labs: U.S. Treasury Probing Crypto Exchanges Over Iran Sanctions Evasion

• TRM Labs reported that the U.S. Treasury is reviewing crypto exchanges for potential Iran sanctions evasion.
• The review includes a broader range of crypto infrastructure and service providers.
• The authorities are looking at platforms, not individual wallet addresses.

The U.S. Department of the Treasury is reviewing whether crypto exchanges and digital asset infrastructure have been used by Iranian-linked actors to circumvent international sanctions. The U.S. regulators are also paying attention to the centralized exchanges, stablecoin routes, and liquidity providers that could act as repeatable access points for the sanctioned individuals. This is likely because the regulators may believe that targeting individual wallet addresses could be ineffective in preventing illicit activities.

Service-Layer Infrastructure in the Crosshairs

According to TRM Labs, some crypto exchanges might have facilitated transaction volumes related to sanctioned Iranian parties. This includes individuals and entities associated with Iran’s Islamic Revolutionary Guard Corps (IRGC). As reported, the analytics firm pointed to exchanges that seemed to be operating on infrastructure that was exposed to Iranian-related transaction flows.

The company clarified that these results are made possible through blockchain data, which monitors transaction patterns rather than attributing liability. These systems can become conduits for sanctions evasion if they do not have adequate measures in place or weak regulations.

Wider Iran-Related Crypto Activity

TRM Labs also noted that Iran’s related crypto activity has grown in recent years. This is due to economic factors and restrictions on accessing traditional financial services. The estimates indicate that billions of dollars’ worth of digital asset transactions related to Iran have taken place each year.

This review is a part of a larger process of adjusting sanctions enforcement to the realities of blockchain finance. By studying the crypto infrastructure and the transaction networks, the regulators hope to find structural weaknesses. As this could be used by the sanctioned countries or their agents.

The Treasury has not mentioned any particular exchanges that are being investigated, and there have been no enforcement actions taken. However, the analysis reported by TRM Labs shows how blockchain intelligence is being used to inform policy decisions.

As explained by TRM Labs, the U.S. Treasury Department’s emphasis on crypto exchanges and infrastructure is a deliberate shift in the enforcement of sanctions. By looking at service-layer platforms, as opposed to just individual wallets, the government is responding to the mechanisms that are being used by sanctioned parties to access financial systems. The results of the study demonstrate the increasing use of blockchain analytics in informing sanctions policies as governments adapt to the crypto environment.

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