Senate Democrats report Iran uses Tether's USDT to bypass sanctions

A Senate Democrats report says Iran uses Tether's dollar-pegged USDT to bypass U.S. sanctions and move money for the government and proxies such as Hezbollah. The Senate Permanent Subcommittee on Investigations says USDT has become a primary payment method for Tehran and a funding tool for terrorist proxy groups, according to The Wall Street Journal, which viewed the findings. Senator Richard Blumenthal led the probe. The probe reviewed 846 wallets sanctioned by the U.S. and Israeli governments over Iran ties and found that 84% traded exclusively or almost exclusively in USDT. Blumenthal said Tether and USDT had become central to Iran's shadow banking system, allowing its government to fund regional proxies, commit human rights abuses and pursue drone and missile programs despite sanctions. USDT accounts for about 60% of stablecoins by market capitalization. Its dollar peg makes it less volatile than other cryptocurrencies and useful for payments. The Wall Street Journal noted that the token is also useful for money laundering. The U.S. Treasury has tightened economic pressure since U.S. military strikes in Iran earlier this year, including through August's Operation Economic Outcast. A Tether spokesman did not respond to requests for comment. Tether has worked with law enforcement to freeze some wallets linked to the Iranian government. TRM Labs data shows USDT's share of volume in Iran-attributed wallets fell from 72% in 2024 to 67% in 2025. The share fell to 14% of on-chain volume in August.