The monitoring system would help Tether identify risky crypto addresses that could be used for bypassing sanctions or illicit activities like terrorist financing, the company said.

Tether, issuer of the largest stablecoin USDT, said Thursday it has teamed up with blockchain surveillance company Chainalysis to monitor transactions with its tokens on secondary markets.

The surveillance system includes international sanctions compliance and illicit transfer detection that could be associated with activities like terrorist financing, and would help Tether identify crypto wallets that could "pose risks or may be associated with illicit and/or sanctioned addresses," according to Tether's blog post.

"Our collaboration with Chainalysis marks a pivotal step in our ongoing commitment to establishing transparency and security within the cryptocurrency industry," Tether CEO Paolo Ardoino said in a statement.

The action comes as pressure from regulators and policymakers globally is mounting on Tether for USDT's alleged role to circumvent international sanctions and facilitate illicit finance. Venezuela's state-run oil company reportedly has been using USDT to bypass U.S. sanctions. A United Nations report earlier this year said the stablecoin plays a key role in underground banking and money laundering in East Asia and Southeast Asia.

USDT is the most popular stablecoin with over $110 billion of tokens in circulation. It's price is pegged to $1 and is backed by mostly U.S. Treasury bonds in the reserve, managed by Wall Street trading house Cantor Fitzgerald. Tether yesterday reported first quarter earnings of $4.52 billion.

USDT is the most popular stablecoin with over $110 billion of tokens in circulation. It's price is pegged to $1 and is backed by mostly U.S. Treasury bonds in the reserve, managed by Wall Street trading house Cantor Fitzgerald. Tether yesterday reported first quarter earnings of $4.52 billion.