Tether’s USDT linked to Iran’s shadow banking system, Senate report finds

The world’s most widely used stablecoin has a sanctions problem, and the US Senate just put numbers on it. A report released by Democrats on the Senate Permanent Subcommittee on Investigations (PSI) on September 28, 2026, lays out evidence that Tether’s USDT has become the backbone of Iran’s sanctions-evasion infrastructure. The 28-page document, titled “Tethered to Terrorism: Crypto and Iran’s Shadow Banking Network,” found that 84% of 846 assessed sanctioned crypto wallets linked to Iran transacted primarily in USDT. Among wallets connected specifically to terrorism financing, that number climbs to 87% out of 757 wallets analyzed. The scale of the problem Iran’s Central Bank has reportedly accumulated at least $507 million in USDT, a reserve that effectively gives the sanctioned nation access to dollar-denominated liquidity without touching the traditional banking system. Sanctioned oil smugglers alone transferred over $603 million in USDT between 2021 and 2025, according to the report’s findings. Iran conducted approximately $2 billion in cryptocurrency transactions in 2025, with USDT dominating the flow. The investigation also identified connections to Hezbollah, the Lebanese m...