Tether’s $344 million freeze raises prospect of Iran turning to Bitcoin

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Iran turning to Bitcoin

Iran’s long history with crypto

Iran has relied on USDT and crypto more generally for a number of use cases in the past, and according to data from blockchain analytics firm Chainalysis, Iran’s total crypto ecosystem reached $7.8 billion in 2025. In January, another blockchain data firm, Elliptic, reported that the Central Bank of Iran purchased $507 million worth of USDT in an effort to support the floundering rial. In addition to propping up the local currency, the USDT was also said to be used for settling international payments that traditional banking channels could not handle because of sanctions.

In 2022 Iranian officials announced the first official $10 million import order paid entirely in cryptocurrency and outlined plans to expand such transactions with partner countries by the end of September that year. More recently Iran signaled that oil tankers passing through the Strait of Hormuz may be required to pay tolls in digital assets. Reports from Bloomberg and Financial Times differ over whether the regime would prefer these toll payments to be made in Bitcoin or stablecoins.

Iran also legalized Bitcoin mining in 2019 specifically to convert surplus oil and natural gas into exportable value. Under the licensing rules established at the time, miners must sell their output to the central bank, which then uses the coins to pay for imports and bypass restrictions on Iranian financial institutions. The sector is said to generate close to $1 billion in annual revenue and consumes up to 600 megawatts of electricity, which would be the equivalent of about 4% of Iran’s total oil exports in 2020.

Beyond activity from the Iranian regime, ordinary Iranians have increased their Bitcoin use during periods of unrest. When nationwide protests began in late December, Chainalysis recorded a 262% rise in withdrawals larger than $10,000 from local exchanges into self-custodial wallets. Similar spikes appeared after events such as the Kerman bombings in January 2024, missile strikes against Israel in October 2024, and the 12-day war. Unlicensed Bitcoin mining operations have also previously been shut down by local authorities, including some that tapped free electricity in mosques.

Why Bitcoin looks like the better option

Of course, it remains unclear why Iran ever relied on USDT at all. Tether maintains close operational ties with U.S. authorities, and the stablecoin includes technical features that let the issuer freeze balances on demand. This setup functions much like the sanctions process in conventional banking, giving the U.S. government effective reach over funds held in the token.

From a purely technical standpoint, sticking exclusively with Bitcoin would have seemingly aligned better with Iran’s goals, as it would not allow any other nation state to seize Iranian assets or disrupt their monetary operations. The broader crypto industry has faced steady criticism for the centralization that has crept in over the past several years, and stablecoins sit at the center of that trend. With Tether freezing such a large amount of USDT tied to one of the U.S.’s key geopolitical enemies, it’s clear that these criticisms around crypto centralization are far from theoretical.

Iran may have chosen Tether simply because its price stayed steady compared with Bitcoin’s volatility. However, the volatility risks associated with Bitcoin’s price may now not seem as bad when considering that the value of $344 million of the Iranian regime’s USDT has effectively gone to zero through this enforcement action.

With all this said, stablecoins and Bitcoin are likely to continue to work alongside each other. Notably, Tether holds Bitcoin in their reserves and has described the asset as “the cornerstone of a decentralized financial future.” The company currently has roughly 97,000 Bitcoin on its balance sheet and routes a portion of profits from U.S. Treasury holdings into the cryptocurrency. That said, stablecoins remain under issuer control and can be influenced by the governments that regulate or pressure those issuers. While they once looked like a frictionless way for anyone, including sanctioned nation states like Iran, to move value, this latest situation shows those seeking lasting independence from post-World War II U.S. financial dominance likely need to opt for the true decentralization and censorship resistance of Bitcoin.

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As BitMEX Research noted on X following the freezing of Iran’s USDT, “This is good for Bitcoin.”

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