A new US Senate investigation finds that most sanctioned Iran-linked crypto wallets moved funds almost exclusively through Tether's USDT stablecoin. Tether says it has already frozen roughly $550 million tied to Iran this year, underscoring how stablecoins have become both a sanctions workaround and a new enforcement point.
Stablecoins have become part of the machinery Iran uses to move money around US sanctions. Democratic investigators on the US Senate Permanent Subcommittee on Investigations examined 846 crypto wallets sanctioned or targeted for seizure over links to Iran and its regional proxies, finding that 84% had transacted exclusively or nearly exclusively in USDT.
USDT is a token designed to track the US dollar. Instead of routing dollars through a bank and the traditional banking system, USDT moves directly between crypto wallets, which explains its appeal to a country facing heavy restrictions on international banks and dollar payment systems.
Treasury targets crypto alongside oil and banks
US authorities are not blind to this shift. The Treasury's Operation Economic Outcast has sought to target Iran's digital-asset infrastructure alongside the more familiar channels of oil exports and traditional finance.
However, moving outside banking rails does not put USDT beyond control. Tether is a centralized issuer and can freeze tokens held in identified wallets.
Tether has frozen hundreds of millions in Iran-linked tokens
Tether has supported the freezing of roughly $550 million in Iran-linked USDT during 2026. That includes more than $344 million across two wallets in April and over $130 million across another four wallets in July. The company also argues that public blockchains can help authorities trace illicit flows and intervene once relevant addresses are identified.
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