Lede
The dual role of stablecoins has come to the forefront following recent political and economic turmoil in Iran and Venezuela. In these nations, US dollar-backed assets such as Tether have emerged as a critical lifeline for citizens navigating economic instability, while simultaneously serving as a vehicle for blacklisted entities attempting to evade international sanctions. This paradox highlights the complex utility of digital assets in regions where local currencies are failing and geopolitical pressures are mounting.
In Iran, the situation has become particularly acute over the past two weeks as widespread protests have erupted across the nation. These demonstrations are largely a response to deteriorating economic conditions, characterized by the Iranian rial dropping to record lows against the US dollar. As the domestic currency loses its value, citizens have increasingly turned to digital alternatives to preserve their purchasing power. Among these assets, Tron-based Tether (USDT) has reportedly become the most utilized digital asset in the country, providing a stable medium for those caught in the midst of a deepening financial crisis. While the technology offers a means of survival for individuals, it also presents challenges for regulators and international bodies monitoring sanctioned activities. The reliance on stablecoins suggests that in environments of hyperinflation and civil unrest, digital tokens act as more than just speculative investments; they function as essential tools for financial preservation and basic economic participation.
Context
The Iranian government has taken several steps to manage the economic and social unrest that has gripped the country. On a recent Thursday, authorities moved to cut off domestic internet access, a measure often used to limit the organization of protests and the flow of information during periods of civil instability. In addition to these restrictive measures, the government has introduced specific regulations targeting the burgeoning use of stablecoins. In late September, an annual limit was established for individual citizens, restricting stablecoin holdings to a maximum of $10,000 and limiting annual purchases to $5,000 per person.
Despite these domestic restrictions, the use of stablecoins for state-aligned activities appears to persist through complex financial networks. Reports indicate that since 2023, Iran’s Islamic Revolutionary Guard Corps (IRGC) has allegedly moved more than $1 billion worth of stablecoins. These transactions were reportedly facilitated through two front companies based in the United Kingdom, known as Zedcex and Zedxion. These entities are believed to serve as financial infrastructure for the IRGC, operating within a broader ecosystem designed for sanctions evasion. A central figure in these operations is Babak Zanjani, a financier with a history of involvement in sanctions-evasion schemes, including the laundering of billions in oil revenue on behalf of regime entities. This network demonstrates how digital assets can be utilized by sanctioned organizations to move value across jurisdictions, bypassing traditional banking systems that are subject to international oversight.
Impact
Venezuela presents a similar case where the local population and state-run entities have turned to Tether to mitigate the effects of economic uncertainty. Venezuelans have widely adopted USDT as a hedge against the plummeting value of the Venezuelan bolivar, which has faced severe devaluation over the last decade. In this environment, Tether serves as a primary tool for citizens to protect their savings and conduct daily transactions, moving away from traditional banking institutions that many no longer trust. This bottom-up adoption reflects the utility of stablecoins as a stable unit of account in hyperinflationary economies.
At the institutional level, the Venezuelan state-run oil company, Petroleos de Venezuela, has also integrated stablecoins into its core financial operations. The company began demanding that payments for oil be made directly in USDT as a strategy to circumvent international sanctions that were originally imposed in 2020. Current estimates suggest that Petroleos de Venezuela now accepts approximately 80% of its total oil revenue through Tether. By utilizing stablecoins, the state-run firm is able to maintain its export activities and settle both incoming and outgoing payments while avoiding the friction of the global financial system. This shift has turned the oil industry in Venezuela into a significant user of digital assets, further embedding Tether into the national economy. The reliance on USDT by a major state enterprise underscores the difficulty of enforcing traditional economic sanctions when digital alternatives provide a liquid and accessible pathway for high-value trade.
Outlook
As the use of stablecoins by sanctioned entities becomes more transparent, the companies issuing these assets are increasing their cooperation with international regulators. Tether has been actively working with the United States government to identify and restrict the use of its platform for illicit activities. This cooperation has resulted in the blacklisting of dozens of digital wallets specifically linked to the domestic oil trade in sanctioned regions. These actions are part of a broader effort to prevent the misuse of stablecoins while maintaining their availability for legitimate users and citizens in embattled regions.
Between 2023 and late 2025, Tether reportedly blacklisted approximately $3.3 billion worth of funds. A significant portion of this total—roughly $1.75 billion—consisted of USDT issued on the Tron network. More recently, the firm expanded these enforcement actions by freezing $182 million worth of Tron-based USDT across five specific wallets. While these recent freezes have not been explicitly tied to either Iran or Venezuela, they reflect an ongoing trend of heightened monitoring and intervention by stablecoin issuers. The scale of these frozen assets highlights the ongoing struggle between entities seeking to use digital currencies for sanctions evasion and the technological measures deployed to stop them. Moving forward, the balance between providing a financial haven for citizens and the enforcement of international law remains a central challenge for the cryptocurrency industry and global regulators alike.
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