Iran’s Central Bank Accused of Building a $500 Million “Shadow Dollar System” with USDT to Evade Sanctions
A groundbreaking investigation by blockchain analytics firm Elliptic reveals that the Central Bank of Iran has systematically amassed at least $500 million in Tether (USDT) over the past year. This significant accumulation is believed to be a strategic maneuver to bolster the beleaguered Iranian Rial and establish an alternative conduit for settling international trade, effectively constructing a “shadow dollar system” that operates beyond the reach of global financial sanctions and traditional banking frameworks.
For years, Iran has grappled with severe international sanctions, which have largely disconnected it from the global banking network and excluded it from the SWIFT messaging system. This isolation has severely hampered cross-border fund transfers and trade settlements. Elliptic’s analysis posits that in response to these profound limitations, Iran’s central bank has turned to large-scale USDT holdings as a vital substitute for the U.S. dollar, leveraging it to stabilize domestic exchange rates and facilitate critical foreign trade activities.
Echoes of Broader Sanctions Evasion
These findings resonate with a parallel investigation published by The Washington Post earlier this month. The Post’s report indicated that since 2023, Iran’s Islamic Revolutionary Guard Corps (IRGC) has allegedly channeled approximately $1 billion through two UK-registered cryptocurrency exchanges, with the overwhelming majority of these transactions settled in USDT. This paints a broader picture of Iran’s concerted efforts to circumvent financial restrictions using digital assets.
USDT as a Tool for Economic Stability
Elliptic further elaborated that the period of Iran’s aggressive USDT accumulation precisely coincided with a phase of intense domestic economic upheaval. During this time, the Rial’s value against the U.S. dollar plummeted by nearly half in just eight months, reaching unprecedented lows. The report suggests that the Iranian central bank likely utilized local exchange platforms, such as Nobitex, to acquire Rial with USDT. This tactic, designed to arrest the currency’s freefall, essentially mimics traditional “open market operations” typically executed with foreign exchange reserves, but crucially, it’s performed using cryptocurrency.
A Digital Offshore Banking Mechanism
The analysis concludes that the Central Bank of Iran appears to be meticulously crafting a banking mechanism capable of perfectly replicating the functionalities of conventional dollar accounts. Elliptic underscores the gravity of this development:
“By treating USDT as a ‘digital, off-balance-sheet Eurodollar account,’ the Iranian regime has successfully created a shadow financial layer. This system possesses a powerful ability to hold dollar value and operates entirely in a blind spot beyond the reach of US regulatory authority.”
This sophisticated use of stablecoins highlights the evolving landscape of global finance, where nations under sanctions are increasingly exploring decentralized digital assets to navigate traditional financial barriers and maintain economic viability.
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