They say opposites attract, and this is certainly the case when it comes to stablecoins and regulatory scrutiny. Now, Tether [USDT] and Circle [USDC] are in the spotlight yet again alongside other stablecoin issuers.
Et tu, Senator?
Senator and Chair of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Sherrod Brown, sent out letters to a variety of crypto entities such as Coinbase, Gemini, Paxos, TrustToken, Binance.US, Centre, Circle, and Tether.
The letter formats were highly similar, and contained the senator’s concerns about stablecoins as assets, as well as questions about their working.
One request from the letter sent to Circle stated,
“Please summarize any internal reviews or studies your company has conducted about how specific levels of redemptions would affect USDC, including its convertibility into U.S. dollars, or would affect the financial position of your company.”
Circle CEO and co-founder Jeremy Allaire was one of the few to publicly reply to the information request. He expressed his willingness to work with the senator and clear his doubts.
Thank you @SenSherrodBrown for the letter inquiring about the important topic of how stablecoin issuers protect consumers. I look forward to responding and working with you to ensure consumers are appropriately protected. https://t.co/RWWmI0erOA
— Jeremy Allaire (@jerallaire) November 24, 2021
Meanwhile, Tether and Bitfinex CTO Paolo Ardoino stressed on the fact that Tether wasn’t alone in being questioned.
Nice clickbait headline…
Similar letters have been sent to all other stablecoin issuers… https://t.co/3PYTcX8LqL
— Paolo Ardoino (@paoloardoino) November 24, 2021
Should the past stay in the past?
Here, it’s worth noting that USDC issuer Circle recently revealed that it was being investigated by the SEC and what’s more, was “cooperating fully.”
Meanwhile, Tether was determined to move into the future without any past baggage – specifically, a $41 million penalty courtesy of the Commodity Futures Trading Commission [CFTC]. The stablecoin company has been testing new platforms – Notabene and Shyft – to ensure it complies with the Financial Action Task Force’s [FATF] crypto Travel Rules.
The company also made sure everyone knew about its pro-regulatory stance.
We welcome the President’s Working Group’s Report on Stablecoins ⬇️https://t.co/4YLhS1WCUi
— Tether (@Tether_to) November 2, 2021
Back me up here
Is Tether fully backed? And if so, is there a US dollar for every USDT token? These are timeless questions and even the company is tired of them. However, the crypto platform Protos has been looking into USDT acquisitions and whether large buyers got USDT at a discount.
In its report, Protos claimed,
“In fact, Tether has gone out of its way to obfuscate the services it provides to the crypto industry. Discounts for large issuances are rumored. In our research, we are yet to find any confirmation of any discounts for USDT purchases.”
“But what is proven is that Bankman-Fried’s Alameda Research and Cumberland Global are two prolific Tether buyers that trust USDT is valued correctly. Together, they’ve acquired at least $60 billion worth of USDT in the past two years.”