A Democratic-led report from the Senate Permanent Subcommittee on Investigations says Tether’s USDT has become central to Iran’s sanctions-evasion and shadow-banking networks. The 28-page report, titled "Tethered to Terrorism: Crypto and Iran’s Shadow Banking Network," found that 84% of 846 assessed sanctioned wallets linked to Iran transacted primarily in USDT, rising to 87% among 757 wallets connected specifically to terrorism financing. It said Iran’s Central Bank had accumulated at least $507 million in USDT and that sanctioned oil smugglers transferred more than $603 million through the token between 2021 and 2025. Iran conducted about $2 billion in cryptocurrency transactions in 2025, with USDT dominating the flow. The subcommittee referred its findings to the Treasury and Justice departments and criticized Tether for delays in blocking some wallets. Tether said it cooperated with U.S. authorities and froze nearly $550 million in Iran-linked USDT during 2026, including $344 million in April and more than $130 million in July. The report also identified links to Hezbollah and said USDT’s liquidity, dollar stability and broad acceptance outweighed the risk of eventual freezing for illicit users. Four Iranian crypto exchanges were sanctioned on June 2, 2026, for alleged links to the Islamic Revolutionary Guard Corps and money laundering, potentially increasing scrutiny of Tether while sharpening USDC issuer Circle’s compliance-focused positioning.