A report by the U.S. Senate Permanent Subcommittee on Investigations (PSI) identified stablecoins, especially USDT, as a key liquidity channel supporting Iran’s shadow banking system.
That finding raises sanctions-compliance pressure on licensed virtual asset service providers (VASPs) in the Gulf Cooperation Council (GCC) region, which are expected to strengthen wallet attribution and counterparty assessment.
Settling into local fiat does not remove sanctions risk
Soham Jethani, a partner at law firm Septten, said merchants do not sidestep sanctions risk simply by converting crypto asset payments into local fiat currency. Liability can involve providing funds or economic resources to designated parties, as well as handling assets within a transaction chain, and it may arise before a bank completes final settlement.
Legal ownership depends on contracts and payment flows
Jethani said a stablecoin’s name or denomination does not determine legal ownership. The relevant rights depend on contractual arrangements and the actual payment process.
He also said globally circulating stablecoins may create secondary sanctions risk. An indirect or historical wallet link does not automatically amount to a violation and must be assessed in light of the applicable regime, the parties involved in the transaction, and the specific facts.
Responsibilities for licensed firms in regulated markets
In regulated markets such as the United Arab Emirates, wallets at licensed exchanges remain under continuous monitoring, and related funds can be frozen before consumer settlement. Merchants are also required to complete KYC.
Regulated VASPs that handle deposits and withdrawals bear responsibility for counterparty review, sanctions-risk assessment, and the controls tied to those obligations.