The Geopolitical Dilemma of Stablecoins: How USDT Became a Lifeline and Sanctions Tool in Iran and Venezuela

In early 2026, the exchange rate of the Iranian Rial against the US dollar plummeted to a historic low, while Venezuela’s local currency continued to depreciate, and the economic and political situations in both countries became increasingly tense. Against this backdrop, stablecoins denominated in USD—especially Tether’s USDT—are playing a nuanced dual role in these two nations: serving as a financial lifeline for ordinary people to combat inflation, and acting as a gray tool for sanctioned entities to evade international sanctions. This contradictory reality is prompting global regulators to reevaluate the positioning of stablecoins within the international financial system.

Stablecoins as a Financial Alternative for Economies in Disorder

In Iran, amid internet disruptions and an unstable financial system, the public is increasingly turning to cryptocurrencies and stablecoins to preserve purchasing power. USDT issued on the Tron network, due to its convenience and dollar-pegged stability, is widely used for value storage and transaction settlement. Similar situations are occurring in Venezuela, where long-term devaluation of the local currency and damaged banking credit have led to widespread use of USDT for daily payments and commercial transactions. Venezuelans prefer digital wallets over traditional bank accounts, and the penetration of stablecoins into the real economy continues to rise.

From the perspective of the public, this choice is quite rational. When the national currency loses credibility and the banking system collapses, USD stablecoins provide a relatively reliable financial channel. According to recent data, USDT’s current market capitalization is $18.67 billion, with a circulation exceeding 18.69 billion tokens. This vast liquidity base ensures its availability in these countries.

The Other Side of Sanctions Evasion Tools

But the story of stablecoins is not limited to this. Blockchain analytics firm TRM Labs revealed another reality: since 2023, the Islamic Revolutionary Guard Corps (IRGC) of Iran has transferred over $1 billion in stablecoin funds through multiple overseas shell companies to evade international sanctions. Venezuela’s state oil company has also been reported to extensively use USDT for international settlements to bypass sanctions imposed since 2020.

This means that the same tool, in the hands of different actors, produces diametrically opposed effects. Citizens use it to protect assets, while governments and sanctioned entities use it to evade regulation. This dual nature is an unavoidable reality for stablecoins.

Tether’s Compliance Dilemma

Faced with this dilemma, Tether is strengthening its compliance cooperation. According to the latest reports, between 2023 and 2025, Tether froze several billion dollars worth of USDT assets, a significant portion of which came from the Tron network. As we enter 2026, related freezing actions are ongoing. Meanwhile, Tether recently partnered with the United Nations Office on Drugs and Crime (UNODC) to enhance cybersecurity education and digital asset security awareness in Africa.

These initiatives reflect Tether’s attempt to balance regulatory pressure with market demand. On one hand, it needs to meet global regulatory compliance by freezing illicit funds; on the other, it aims to provide financial services to those excluded from traditional financial systems. Striking this balance is challenging.

Continued Growth of the Stablecoin Market

Recent reports indicate that in the past week, Tether and Circle together issued an additional $3.75 billion in stablecoins, with Tether alone issuing $1 billion in a single transaction. The total stablecoin trading volume in 2025 reached a record $33 trillion. This growth is driven by multiple factors: macroeconomic uncertainty increasing demand for USD, emerging markets seeking financial alternatives, and the DeFi ecosystem’s appetite for liquidity.

New Perspectives on Global Regulation

The cases of Iran and Venezuela clearly demonstrate the dual nature of stablecoins. This is prompting regulators worldwide to reconsider the positioning and boundaries of stablecoins within the international financial system. Some countries are setting limits on stablecoin holdings (e.g., Iran’s 2025 policy), while others are drafting new frameworks for digital asset regulation (e.g., Vietnam’s recently enacted “Digital Technology Industry Law”). These developments reflect regulatory efforts to find a new balance.

Summary

The application of stablecoins in Iran and Venezuela showcases both the innovative value of cryptocurrencies and the regulatory challenges they pose. USDT has become an influential force in the global economy, but its existence also forces us to face a complex reality: the same financial tool can help ordinary people survive economic crises or be used to bypass international sanctions. This is not merely a technical issue but a challenge for global financial governance. Future stablecoin regulation will need to strike a new balance between protecting financial innovation and maintaining international order.