The U.S. Treasury's Office of Foreign Assets Control (OFAC) has updated its sanctions on the Central Bank of Iran to include four additional cryptocurrency wallet addresses, which together received $165 million in stablecoins. Tether, the issuer of USDT, has frozen $131 million of those funds, rendering them inaccessible to the Iranian regime.
OFAC Expands Sanctions on Iran's Central Bank
The updated designations, announced Tuesday, expand OFAC's financial blockade against the Central Bank of Iran, which has been using cryptocurrency to circumvent sanctions, fund regime operations, and funnel assets to regional allies, including Hezbollah, a U.S.-designated terrorist group. The move comes amid heightened scrutiny of Iran's crypto activities since the outbreak of the war with Iran. Last month, OFAC sanctioned major Iranian crypto exchanges that the Central Bank had used to convert fiat into stablecoins.
Iran's Reliance on Stablecoins
Chainalysis research reveals that Iran's regime prefers stablecoins for their high liquidity and global acceptance, attributes that benefit both legitimate and illicit users. However, stablecoins also pose a significant risk for illicit actors because issuers can freeze funds at law enforcement's direction. Tether has now frozen nearly $475 million from OFAC-identified Central Bank of Iran addresses, crippling the regime's ability to move value.
On-Chain Analysis and Broader Implications
On-chain analysis using Chainalysis Reactor shows that the newly designated addresses received funds from an institutional liquidity provider and an Asia-based payment processor. During the conflict, Iranian actors also proposed levying a crypto toll on ships passing through the Strait of Hormuz, a move Chainalysis assessed would expose shipping companies to significant sanctions risk. The freeze demonstrates how stablecoin issuers can enforce sanctions, cutting off nearly half a billion dollars from the Iranian regime.