On Sept. 18, Tether hosted a black-tie soiree in Charlotte, North Carolina, where more than a hundred people gathered to mark the planned opening of the stablecoin issuer's US headquarters. Guests tucked into brisket while CEO Paolo Ardoino talked through Tether's investment footprint and its goal of expanding financial inclusion, according to an attendee. White House crypto adviser Patrick Witt attended, say two people who were there, and Cantor Fitzgerald Chairman Brandon Lutnick was also in the room, one attendee said. The White House has consistently cast its crypto policy as a way to boost US innovation and preserve an advantage over China.
About ten days after the gala, Democratic staff for the Senate Permanent Subcommittee on Investigations released a report that painted a starkly different picture. Investigators said Iran relied heavily on Tether's USDT to get around sanctions and to fund regional proxies including Hezbollah. Of 846 crypto wallets sanctioned or targeted for seizure for ties to Iran and its proxies, the report said 84% were transacting exclusively, or nearly so, in USDT. The report also criticized what it called "undue leniency" shown to crypto firms under President Donald Trump.
"Tether is taking advantage of the permissive environment that the Trump Administration has created," Senator Richard Blumenthal said.
Ardoino said the report "felt like a political attack" on crypto. He argued the numbers are wrong and do not reflect all the funds Tether has frozen. The company collaborates with agencies in 70 countries, he said, including Israel's National Bureau for Counter Terror Financing. "What matters is that now we have stronger relationships." He added the report "might be a warning, I don't know," called it "very poorly constructed," and said Tether only saw the findings once they were made public.
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Tether says its cooperation with authorities has helped freeze about $5 billion tied to illicit activity worldwide, and BlockSec data shows its freezing activity up roughly 500% since 2024. Within hours of the Senate report's release on Sept. 28, Tether said in a blog post that, so far in 2026, it has frozen roughly $550 million of Iran-linked USDT, much of which the Office of Foreign Assets Control has tied to the Central Bank of Iran. Unlike decentralized tokens such as Bitcoin, Tether can blacklist addresses and stop USDT at those locations from moving, making the speed and breadth of freezes a central friction point in the debate.
Behind the scenes, Tether's footprint in US assets is massive. As of September, it held about $134 billion in Treasuries and in reverse repurchase agreements backed by US government debt. Bessent has said stablecoins could grow to $3 trillion by the end of the decade, even though overall supply has mostly flatlined over the last year. The administration is weighing a plan to encourage stablecoin use abroad to reinforce the dollar's role and support demand for Treasuries.
The split-screen moment in Charlotte shows how much Tether's fate can swing with Washington. Just days before the party, the Senate failed to advance the Clarity Act, which would have put wider digital-asset rules into statute. Congress has passed a national framework for stablecoins via the Genius Act, but the broader crypto rulebook is still unsettled, and regulators have been filling in gaps on their own. That leaves parts of the industry's playbook exposed to an administration change.
El Salvador-based Tether is especially sensitive to those swings. That stance shifted after the 2024 elections.
Political winds could still change. The crypto industry "continues to have significant pockets of support in this administration and Congress, with this support seemingly unswayed by any unsavory aspects related to illicit transactions or regulatory noncompliance," said Eswar Prasad of Cornell University. Looking ahead, Max Meizlish of the Foundation for Defense of Democracies said the report "reads like a warning shot that, under a different administration, Treasury could someday determine Tether is a financial institution of primary money laundering concern." His bottom line: "Tether needs to be doing more."
For everyday savers, here's the plain-English read: a dominant stablecoin issuer is riding favorable policy while facing calls for its AML and sanctions controls to be scrutinized. That mix of politics, possible regulatory shifts, and a giant pile of Treasuries is exactly the kind of thing that can ripple into a product many people now treat like digital cash.
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