The report is an allegation from one party's investigators, and it does not announce any action, so the direct market effect is likely to be limited to headline risk around USDT and other stablecoin issuers. Tether's roughly 60% share of the stablecoin market means any move by US officials to force faster freezes could matter for crypto liquidity more than for the token's peg. The oil angle is the one to watch: the report ties Iran's use of the token to continued oil sales to allies such as China, so tighter enforcement on those payment channels could add to supply friction at a time when Brent is trading near $105.---Yesterday:Tether's $84 million question: whose money did the US actually seize?---Senate Democrats say Tether's dollar-pegged token has become a core sanctions-dodging tool for Iran, although blockchain data suggests Tehran's reliance may be easing.Summary:A report released Monday by Senate Democrats on the Permanent Subcommittee on Investigations says Iran has relied on Tether's USDT stablecoin to bypass US sanctions and fund proxy groups such as Hezbollah, according to a copy viewed by the Wall Street Journal.The report analysed around 850 wallets sanctioned by the US and Israel over Iran links and found 84% transacted exclusively, or near exclusively, in USDT.The panel referred the report to the Justice and Treasury departments.Tether accounts for about 60% of the stablecoin market by value, and the report criticises the company for not quickly freezing USDT in sanctioned wallets, despite having the ability to do so.Blockchain analytics data suggests Iran may be rethinking its use: USDT's share of transactions across Iran-attributed wallets fell from 72% in 2024 to 67% in 2025.A Tether spokesman did not respond to requests for comment, though the company has worked with law enforcement to freeze some wallets tied to the regime.Iran has relied on Tether's USDT stablecoin to bypass US sanctions and fund proxy groups such as Hezbollah, according to a report released on Monday by Senate Democrats, as first reported by the Wall Street Journal (gated). The report, from the Senate's Permanent Subcommittee on Investigations, says the dollar-pegged token has become a primary means of payment for the Iranian regime, and the panel referred it to officials at the Justice and Treasury departments.The report analysed around 850 wallets sanctioned by the US and Israeli governments in connection with Iran and found that 84% of them transacted exclusively, or near exclusively, in USDT. Senator Richard Blumenthal, a Connecticut Democrat, told the Journal the findings show Tether and its main token have become central to what he called Iran's shadow banking system, helping the government fund regional proxies and its drone and missile programmes despite sanctions. Tether issues USDT, which accounts for about 60% of the stablecoin market by value. Because stablecoins are pegged to real-world currencies, they are less volatile than other digital assets and better suited to payments, including by money launderers.The report cites several examples. Leaked documents appeared to show an Iranian company brokering the purchase of tens of millions of dollars of USDT by the Central Bank of Iran, the Journal reported earlier this year. Analysis of public blockchain data later linked some of that USDT to the $1.5 billion hack of the Bybit exchange by North Korea, and the report, citing an Iranian media report, says the purchase was part of an effort to prop up the rial and keep selling oil to allies such as China. It also criticises Tether for failing to freeze USDT quickly in wallets sanctioned by the US and Israel, noting the company can freeze tokens and re-create them in another wallet. Tether was still a common thread in many of the wallets most recently sanctioned, including some tied to the Central Bank of Iran in July and a network accused of helping facilitate Iranian oil sales.Some evidence suggests Iran may be changing tack. According to blockchain analytics firm TRM Labs, USDT's share of transactions across wallets attributed to Iran fell from 72% in 2024 to 67% in 2025, and in August it represented 14% of on-chain volume. A Tether spokesman did not respond to requests for comment, though the company has worked with law enforcement to freeze some wallets tied to the regime. The Treasury Department has stepped up its economic campaign against Iran since US military strikes earlier this year, including an effort in August dubbed Operation Economic Outcast.Attention now turns to whether the Justice and Treasury departments act on the referral, whether Tether responds publicly, and whether tighter enforcement on stablecoin payments changes how Iran moves money and sells oil. This article was written by Eamonn Sheridan at investinglive.com.