Iran's Stablecoin Lifeline Under Siege: Crisis Reveals Tension Between Legitimacy and Sanctions Evasion

Iran's Central Bank took a bold move when it temporarily halted trading in the USDT-toman pair during airstrikes, revealing the critical role of stablecoins in the country's financial system.

The decision was made to slow down currency repricing during a crisis, but this action also highlighted the tension between the dollar peg that enables legitimate cross-border payments and its potential use for sanctions evasion.

A report by TRM Labs found that Iran's internet connectivity dropped by nearly 99% when US-Israeli strikes hit on February 28, causing crypto transaction volumes to collapse by 80%. Exchanges shifted into defensive mode, with some suspending withdrawals entirely, others freezing withdrawals in both crypto and rial, and several moving to twice-daily batch processing.