GCC stablecoin transactions face scrutiny after US Senate findings
US Senate investigators have linked tether to Iran's shadow banking network, prompting warnings that Gulf virtual asset providers and merchants face greater sanctions compliance risk.
Why it matters: The Senate findings could reshape counterparty risk checks for Gulf exchanges and merchants, tying the region's stablecoin flows more closely to Iran sanctions enforcement.
Key points
- The US Senate Permanent Subcommittee on Investigations identified stablecoins, particularly tether (USDT), as a key liquidity engine for Iran's shadow banking apparatus.
- Soham Jethani, partner at law firm Septten, said receiving local currency in a domestic bank account does not shield merchants from sanctions exposure.
- Jethani said licensed VASPs bear the operational burden, including Travel Rule compliance and counterparty screening, and face fines if transactions go wrong.
GCC stablecoin transactions are under fresh scrutiny after the US Senate Permanent Subcommittee on Investigations named stablecoins, particularly tether (USDT), as a key liquidity engine for Iran's shadow banking apparatus. Bitcoin.com News reports that the findings could increase compliance pressure on licensed virtual asset service providers across the Gulf Cooperation Council, given the region's proximity to Iran and its cross-border trade networks.
Legal experts warn that liability does not begin or end with bank settlement. Soham Jethani, a partner at law firm Septten, said there is no single universal point in the payment chain where liability attaches.
Senate findings raise pressure
Jethani said receiving fiat currency does not remove underlying compliance obligations.
The article also raises questions about token title.
Liability across payment rails
In instant retail checkout, he said real-time screening depends on data quality, but UAE transactions are risk-fenced before checkout, with pre-screening and KYC onboarding of merchants.
He said the duty always falls on the regulated intermediary in the transaction, which would be held responsible and face fines if things go wrong.
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