Middle East crypto flows hit $350B after conflict

A blockchain intelligence firm reported that on-chain crypto activity in the Middle East rose to about $350 billion over the past year, roughly three times the level of the prior period. The firm measured value moving through wallets, exchanges and peer-to-peer networks in countries across the region.

The firm said activity accelerated after fighting began earlier in the year and reflected higher market trading, larger flows into stablecoins and more cross-border transfers. Both retail and institutional participants increased use of crypto services, the analysis shows.

Centralized exchanges recorded substantial inflows as traders sought liquidity. Stablecoins saw large inflows as users sought to preserve value amid local currency volatility and new controls on capital movements.

Peer-to-peer trading volumes rose in markets where on- and off-ramps were disrupted or where limits on moving fiat abroad were enforced. Cross-border transfers, including remittances and private transfers, accounted for a sizable share of the increased on-chain volume.

The report identified greater use of privacy-enhancing services and token-mixing tools in specific transfer corridors, which increased difficulty in tracing some transactions.

Report authors identified legitimate drivers for the surge, such as faster remittances, emergency payments and business fund transfers when traditional payment rails slowed. They also flagged instances suggesting potential misuse for sanctions avoidance, unlicensed fundraising and money laundering, noting token movements between wallets linked to sanctioned entities and global exchanges.

Regulatory responses varied across the region. Several Gulf states accelerated licensing programs and clarified rules for spot trading, custodial services and token listings. Other countries tightened enforcement and controls on crypto on-ramps.

The report called for more coordinated oversight among regional regulators, improved exchange compliance with global standards, enhanced know-your-customer checks, stronger monitoring of peer-to-peer platforms and expanded use of blockchain analytics by law enforcement. The report recommended preserving legitimate cross-border payment channels such as remittances while reducing avenues for misuse.

Authors warned that without clearer rules and stronger compliance, large crypto flows could pose risks to financial integrity and could complicate humanitarian and economic responses in areas affected by the conflict.