Tether's Role in Venezuela, Iran Highlights the Duality of Stablecoins

Stablecoins such as Tether (USDT) have become a critical part of economic life in countries like Venezuela and Iran. In these nations, where hyperinflation and political instability have eroded trust in local currencies, stablecoins offer a way to preserve value and conduct transactions according to reports. The widespread adoption of Tether in these markets reflects both its utility and its vulnerability to misuse as data shows.

Tether's role in these economies is multifaceted. For ordinary citizens, it serves as a hedge against devaluation of local fiat and provides a means to transact in a more stable currency. In Iran, for instance, the rial has lost significant value, and Tether has been used extensively for everyday payments as reported. Similarly, in Venezuela, Tether is now accepted for services like haircuts and landscaping according to analysis.

However, the same tools that help individuals also enable sanctioned entities to circumvent financial restrictions. Iran's Islamic Revolutionary Guard Corps (IRGC) has used Tether and other stablecoins to move large sums via UK-based front companies according to reports. This has led to growing scrutiny from blockchain analytics firms and regulators as analysis shows.

Why Did This Happen?

The widespread use of Tether in Venezuela and Iran is driven by economic necessity. In both countries, the local currency has lost significant value, eroding purchasing power and fueling a shift toward digital alternatives according to reports.

In Venezuela, the government's state-run oil company, Petroleos de Venezuela (PDVSA), now accepts about 80% of its oil revenue in Tether. This shift allows the firm to bypass U.S. sanctions and maintain a cash flow in a stable currency as data indicates.

Iran has followed a similar pattern. Despite government-imposed caps on stablecoin holdings, many citizens continue to use Tether to hedge against economic uncertainty. At the same time, sanctioned entities have exploited the system to move funds internationally according to analysis.

How Did Markets React?

Tether's growing role in these markets has raised concerns among regulators and policymakers. In response, Tether has taken steps to blacklist wallets associated with sanctioned activity. Between 2023 and late 2025, Tether blacklisted around $3.3 billion in transactions, including $1.75 billion in Tron-based USDT as reported.

These actions have had a measurable impact on the flow of funds. The U.S. government has collaborated with Tether to identify and block wallets linked to illicit activity in Venezuela and Iran according to reports. However, the effectiveness of these measures is still being assessed as analysis shows.

What Are Analysts Watching Next?

Analysts are closely monitoring how governments and regulators respond to the growing use of stablecoins in sanctioned jurisdictions. The U.S. has taken a firm stance, with President Trump emphasizing the importance of maintaining the petrodollar and controlling financial flows according to analysis.

At the same time, institutional adoption of stablecoins is rising globally. In 2025, stablecoin transaction volumes hit $33 trillion, with USDC and Tether leading the way as reported. This growth suggests that stablecoins are becoming a more integral part of the global financial system, even as concerns about their use for illicit purposes persist according to reports.

Investors are also watching how Tether and other stablecoin issuers navigate the evolving regulatory landscape. Tether's recent move to introduce a unit of account called "Scudo" for gold-backed transactions reflects its broader strategy to expand use cases for digital assets as reported.

The dual role of stablecoins in economic survival and illicit activity is likely to remain a topic of intense debate as more countries integrate them into their financial systems.