The recent turmoil in Venezuela and Iran has once again thrown the duality of stablecoins into the spotlight, with US dollar-backed assets such as Tether acting as both a savior for citizens in conflict and a tool for blacklisted entities to evade sanctions.
Both Venezuela and Iran made headlines in early 2026 amid political uncertainty and civil unrest. Both facing a host of sanctions, inflation, political instability and a cost of living crisis, crypto and stablecoins have become an important part of the ecosystem.
The entanglement of Iran’s stablecoin
Iran has seen protests erupt across the country in the past two weeks in response to worsening economic conditions and the Iranian rial falling to record lows against the US dollar.
The situation escalated from local protests to large-scale protests across Iran, with thousands arrested and hundreds allegedly killed. Amidst this backdrop, the Iranian government also decided to cut off domestic internet access on Thursday.
Crypto and stablecoins have become an important tool for Iranian citizens, as the value of the Iranian rial against the US dollar has been falling for decades.
Tether based on Tron (USDT) is allegedly the most used asset in the country, and citizens use it to protect against inflation and systemic risk.
Wider acceptance took a hit in 2025, however, with the hack of the country’s largest stock exchange and a significant number of Tether blacklists. In the meantime, the government also set the annual limit to stablecoins in late September, allowing citizens a maximum holding of $10,000 and a maximum purchase of $5,000 per person.
But stablecoins are also used by sanctioned entities. A report from blockchain analytics firm TRM Labs on Friday indicates that since 2023, Iran’s Islamic Revolutionary Guard Corps (IRGC) has allegedly moved more than $1 billion worth of stablecoins through two “UK-based front companies” called Zedcex and Zedxion.
The report claimed that despite publicly presenting themselves as individual companies, the two companies quietly functioned together “as a financial infrastructure for the IRGC”.
“In practice, they operate as a single enterprise embedded in Iran’s broader sanctions-avoidance ecosystem, moving value across borders, currencies and jurisdictions on behalf of one of the most heavily sanctioned military organizations in the world,” TRM Labs said.
“A key figure in this network is Babak Zanjani, a long-time Iranian financier of sanctions evasion who was previously convicted of laundering billions in oil revenues on behalf of regime entities, including the IRGC,” TRM Labs added.
Venezuela is closely related to the USDT
Similar to the Iranians, Venezuelans have also adopted the USDT to hedge against economic uncertainty, as the Venezuelan bolivar has plummeted over the past decade.
Related: Fiat inflation drives cryptocurrency adoption around the world
A severe lack of trust in banks has reportedly led to USDT being so widely accepted that everyday people are using the asset to pay for all sorts of everyday services, opting to set up crypto wallets instead of using bank accounts.
“How you pay your landscaper and how you pay your hairdresser matters. You can use Tether for basically anything,” 71-year-old Venezuelan crypto entrepreneur Mauricio Di Bartolomeo told Wall Street Journal on Saturday, adding:
“The adoption of stablecoins has gone so far in Venezuela that even without regulated places where you can buy and sell them, people still choose stablecoins over using local banks.”
The WSJ also noted that Venezuela’s state-owned oil company, Petroleos de Venezuela, makes heavy use of USDT. The company has reportedly started demanding payments directly in the stablecoin to avoid sanctions first introduced in 2020.
The company is estimated accept 80% of all its oil revenues via Tether and often uses these assets to settle incoming and outgoing payments.
Tether uses blacklists to combat sanctions evasion
The WSJ report adds that Tether is fighting this by cooperating with the US government to blacklist “dozens of wallets” linked to domestic oil trading.
According to the data made in a Dec. 5 AMLBot report, Tether blacklisted around $3.3 billion worth of assets between 2023 and late 2025, with $1.75 billion of that amount frozen in Tron-based USDT.
During the weekend, the company allegedly added to the figure by freezing $182 million worth of USDT in five wallets; however, it has not been confirmed to be linked to Venezuela or Iran.
Cointelegraph has reached out to Tether for comment.
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