A report released Monday by Senate Democrats alleges that Iran has used digital dollars issued by Tether, a leading cryptocurrency company, to circumvent United States sanctions. The report states that Tether’s stablecoin has become a central mechanism for financial transactions by the Iranian government, facilitating payments that would otherwise be restricted under the existing sanctions framework.

According to the report, Iran’s use of the Tether stablecoin extends beyond routine financial operations, potentially enabling the funding of groups designated as terrorist organizations by the U.S., including Hezbollah. The Democratic senators argue that this digital currency’s widespread acceptance and liquidity make it a powerful tool for Tehran to evade economic restrictions and support proxy activities in the region.

U.S. sanctions on Iran have aimed to restrict the country’s ability to engage in international finance and trade, particularly to limit resources available to entities involved in terrorism and destabilization efforts. The report highlights concerns that anonymous or pseudonymous cryptocurrency transactions complicate enforcement of these measures.

Tether, known for issuing a stablecoin pegged to the U.S. dollar, is one of the largest digital currency issuers globally. The firm’s stablecoins are designed to maintain a consistent value and are widely used across cryptocurrency exchanges and platforms. However, the report implies that this technology may also be exploited to move funds outside traditional financial monitoring systems.

The company has not publicly commented on the specific allegations contained in the Senate Democrats’ report. Cryptocurrency advocates have often pointed to the benefits of digital currencies in providing financial access and reducing transaction costs, while critics emphasize the potential for misuse in illicit finance.

The use of cryptocurrencies in sanction evasion has increasingly drawn attention from U.S. regulators and lawmakers, who are exploring new regulatory and enforcement approaches. This report adds to ongoing debates about the role of digital assets in global financial security and underscores the challenges authorities face in adapting traditional oversight mechanisms to emerging technologies.