Over the weekend, The Wall Street Journal reported on the use of stablecoins, specifically Tether’s USDT, to circumvent sanctions imposed by the United States on Venezuela. The report indicates PdVSA, which is the country’s state-run oil company, began demanding payments to be made via USDT in 2020, with as much as 80% of the country’s oil revenue now arriving by way of the stablecoin.
Notably, Tether also froze $182 million worth of the USDT stablecoin in 5 separate addresses on the TRON blockchain on Sunday. At this time, it is unclear if these funds were associated with sanctions-avoiding activity by the Maduro regime. In a statement provided to The Block, a Tether spokesperson indicated these funds were indeed associated with a law enforcement investigation that has been ongoing for months.
The move from Tether is one of the largest amounts of USDT to be frozen by the stablecoin issuer in a single day. According to reports, it represents more dollar-denominated value than its closest competitor, Circle, has frozen in its entire history.
While Bitcoin was created to avoid much of the centralized control associated with the traditional banking system, stablecoins do not operate in a similarly decentralized manner. These dollar-pegged tokens necessitate a centralized issuer behind them that holds reserves, and they are not nearly as censorship-resistant as the digitally native bitcoin. Stablecoins like USDT and Circle’s USDC have backdoors programmed in them to allow their controllers to do things like freeze funds that are allegedly associated with illicit activity, which some banks view as an advantage over the more permissionless Bitcoin.
The crypto industry has become increasingly centralized around stablecoins, which has created a rift between tech entrepreneurs who want to use them to create useful products and more philosophically focused cypherpunks who want to stick closer to Bitcoin’s original vision of decentralization for end users.
In many ways, stablecoins are the most obvious example of how blockchain technology is now being used to reinforce existing power structures, such as U.S. monetary dominance around the world. Indeed, U.S. Treasury Secretary Scott Bessent has previously indicated this is the key value proposition of stablecoins from the federal government’s perspective. Of course, the Trump-affiliated USD1 stablecoin is also at the center of remarkable corruption allegations associated with the pardon of a former crypto exchange CEO.
Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade. That scenario becomes more likely with passage of the GENIUS Act.
A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back…
— Treasury Secretary Scott Bessent (@SecScottBessent) June 17, 2025
As indicated by a recent report from blockchain analytics firm Chainalysis, Venezuela is not alone in its use of stablecoins for avoiding sanctions, as nation-states were behind much of the massive gains in illicit crypto transfers tracked last year. And despite the more controllable and centralized nature of stablecoins, they are increasingly taking up a much larger piece of the illicit online transaction pie, accounting for 84% of flows in 2025.
The increased adoption of stablecoins is a double-edged sword, as they effectively allow dollars to move more freely around the world. On the one hand, this increased utility provided by stablecoins increases demand for U.S. debt, as these government bonds make up the vast majority of stablecoin reserves. On the other hand, a less-controlled form of the digital dollar means it is better positioned to avoid anti-money laundering and sanctions restrictions. For now, a regulatory structure where issuers do not have to collect the personal details of every individual stablecoin has been allowed to persist.
Notably, another blockchain analytics firm, TRM Labs, released a report last week that indicated two crypto exchanges in the United Kingdom were used to facilitate funding for Iran’s Islamic Revolutionary Guard Corps (IRGC). Tether’s USDT was also at the center of this scheme for evading sanctions.
While crypto can be helpful for regimes that want to avoid economic sanctions and restrictions imposed by the U.S., it can also limit these targeted regimes’ abilities to control their own population’s finances. For example, stablecoins like USDT give those who would otherwise be stuck with massive devaluations of the Venezuelan bolivar or Iranian rial the ability to use a more stable currency that also enables access to the global economy and has fewer restrictions on how it can be used.
JUST IN: 🇷🇺 An advisor to Russian President Vladimir Putin claims the U.S. is using crypto and stablecoins as a way to eliminate its $35 trillion debt pic.twitter.com/Lp8VGlItib
— Crypto Briefing (@Crypto_Briefing) September 8, 2025
As crypto has evolved since the launch of the Bitcoin network in 2009, it’s clear that this financial technology is becoming increasingly relevant to geopolitical power dynamics. China recently enabled interest earnings on its own digital yuan currency, and Russia has been adamant that the U.S. is up to no good with its embrace of the crypto industry. Additionally, there is a Russian ruble-pegged stablecoin that saw more growth than any other stablecoin last year and is being used for sanctions avoidance, according to blockchain analytics firm Elliptic.
Of course, many of the largest banks and tech giants in the world also have plans for using stablecoins to increase their own levels of economic dominance. That said, Bitcoin still exists as a decentralized alternative for those who still care about the original goal of removing third-party trust from the equation altogether.
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