- Houthi jumped to DeFi amid U.S. sanctions against Yemen and Iranian backers.
- DeFi usage in Yemen spiked to 63%, a trend TRM Labs projected would expand.
The U.S. has sanctioned Yemen-based International Bank of Yemen (IBY) for allegedly facilitating the Houthi group. This has forced Yemeni locals, including Houthis, to use DeFi platforms.
In a statement on the 17th of April, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) added that IBY’s top leaders were also sanctioned.
Per OFAC, IBY complemented Iran-backed Houthi attacks that made the Red Sea trans-shipping line unsafe.
For his part, Michael Faulkender, Deputy Secretary of the U.S. Treasury, stated,
“Treasury remains committed to working with the internationally recognized government of Yemen to disrupt the Houthis’ ability to secure funds and procure key components for their destabilizing attacks.”
Additionally, eight crypto wallets were blacklisted, including some linked to an Iranian Houthi backer.
Yemen’s DeFi alternative
TRM Labs, a blockchain security firm, flagged over $900M flows from Houthi-linked wallet addresses to blacklisted users. Per the firm, this was a crypto trend consistent with other terrorist groups like Hamas and ISIS.
Amid the sanctions, the security firm added that Yemeni locals have been hit hard. The ongoing conflict has disrupted even financial services for diaspora remittances.
As a solution, Yemenis have opted for DeFi, which dominated with a 63% usage surge.
TRM Labs stated,
“Website traffic suggests that among individuals in Yemen engaging with cryptocurrency services, DeFi platforms account for the majority of web traffic, constituting over 63% of observed activity.”
Source: TRM Labs
Per TRM Labs, crypto adoption will increase in Iraq and Yemen amid increased sanctions and restrictions in the traditional financial systems.
In fact, the firm said that Yemen could leverage Iran’s technical knowledge to circumvent such blockages via digital assets to fund its operations further.