The Banking Committee sent a letter to the CEO of Tether to request information about said stable coin.
The US Senate Banking Committee chairman, Sherrod Brown, wrote a letter to Jean-Louis van der Velde, CEO of Tether, and requesting information on the Tether stablecoin (USDT).
The senator starts the letter by commenting that, according to the latest report of the President’s Working Group on Financial Markets (PWG), stable coins threaten the protection of investors and the integrity of the market.
The exponential use of stablecoins and its relevance for digital asset transactions highlights how much they need to understand the fundamental workings and limits that Tether offers.
Tether is the most famous stable coin on the market. With daily transactions over USD 82 billion, according to CryptoMarkets, it is the most used currency to acquire cryptocurrencies such as Bitcoin or Ethereum. The daily trading volume with Tether is almost triple that of Bitcoin and quadruple that of Ether.
Senator Brown’s Concerns
Brown noted that the market value of stable coins produced by issuers approached $ 127 billion in October 2021, an increase of nearly 500% over the previous year. Additionally, the complexities of digital assets and stable coins and the requirement for robust networks could make it difficult for investors and consumers to understand their roles and risks.
Brown said there are significant concerns with the non-standard terms applicable to the exchange of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.
The senator added that although stable coins could get generally minted in exchange for US dollars or other conventional currency, purchasing stablecoins through a trading platform may not bring clients the same rights and advantages of a purchase. Furthermore, clients may have different rights depending on the number of stable coins owned or traded.
So the senator asks Tether a series of six questions to get input from the CEO to help elucidate Tether’s critical work items. The senator approached Tether and asked them to answer the series of questions to clarify certain doubts about the security of investors and consumers.
Tether Background
Earlier, executives at digital asset exchange Bitfinex, closely related to Tether, said that the stable coin receives full back up from assets including cash, cash equivalents, and BTC amid reports that only 74 percent of USDT got backed up.
However, on October 15, 2021, the US CFTC issued an order for Tether and Bitfinex to pay fines of $ 42.5 million. According to the document, Tether had to pay $ 41 million for claims that the Tether stable coin received full support from US dollars.
Bitfinex got required to pay at least $ 1.5 million for illegal transactions when operating cryptocurrency trading platform Bitfinex and by previously violating a CFTC order.
By: Jenson Nuñez
