Tether And The Senate Clash Over Iran’s Use Of USDT

A report by Democratic senators accuses USDT of being a pillar of Iran’s parallel banking system. Tether responded the same day, highlighting nearly 550 million dollars frozen in 2026. The episode revives the question of stablecoin regulation.

A Senatorial Report Blames USDT on Iranian Networks

In September, Iran opened its foreign trade to USDT and bitcoin. One month later, Senate Democrats responded with “Tethered to Terrorism“, a 24-page document published Monday by the Permanent Subcommittee on Investigations. It breaks down 846 addresses sanctioned since 2021 by Washington and Israel for their links with Iran and its proxies: 84% operated exclusively, or almost exclusively, in USDT, far ahead of bitcoin.

The text relies on designations from the US OFAC and the Israeli NBCTF. It cites 603 million dollars received over four years by two sanctioned oil traffickers, almost entirely in USDT, and 34.6 million that circulated after the designation of wallets. At the national level, crypto use to circumvent sanctions jumped 694% in 2025, for at least 2 billion illicit transactions.

For the authors, Tether has become a “leading illicit international payment system” for Tehran, and its “repeated failure” to freeze certain wallets has created a “permissive environment.” The company did not respond to the subcommittee’s June inquiry letter.

Tether’s Response: Half a Billion Frozen in 2026

The response came the same day. In a statement published Monday, Tether claims nearly 550 million dollars of USDT frozen in 2026 on wallets linked by Washington to the Central Bank of Iran and the country’s sanction networks. Two highlights: 344 million in April, more than 130 million in July.

Tether also highlights its record: more than 2,800 investigations facilitated in 67 countries and a total of 4.9 billion dollars frozen. The company had already claimed 4.2 billion dollars of illicit tokens frozen in three years earlier this year.

USDT is not a refuge for sanctioned actors, terrorist organizations, or criminal networks.

Paolo Ardoino

Behind the Duel, the Freezing Power of Issuers

The core of the matter lies in a unique feature of stablecoins: their issuers can freeze funds. Tether blacklists an address in its token contract: the funds remain visible, but nothing can be moved out. Senators consider this power exercised too weakly; the issuer replies that it acts upon authorities’ reports. The report notes that USDC, a direct competitor, barely appears.

The political dimension also emerges: the text is signed by the Democratic minority of the subcommittee and criticizes the leniency it attributes to the Trump administration toward crypto companies. Another episode in Tether’s news, between record freezes and recurrent accusations.

The report is preliminary: no sanctions are announced. Pressure is also rising elsewhere: this summer, Washington massively tightened its secondary sanctions against Tehran. Each new freeze, or each silence, will say if the report changes the game.