- Circle executive urges U.S. Treasury to scrutinize Tether, highlighting concerns over illicit activities and financial integrity.
- Tether defends its operations and financial transparency, amidst increasing regulatory and public scrutiny.
In a significant development this week, a Circle executive addressed Congress with a compelling plea for the U.S. Treasury Department to scrutinize Tether, the company behind the leading stablecoin, USDT.
Caroline Hill, Circle’s Senior Director of Global Policy and Regulatory Strategy, delivered her testimony before the House Subcommittee on Digital Assets, Financial Technology, and Inclusion, outlining serious concerns regarding Tether’s operations and its connections to the U.S. financial system.
Circle’s Position on Stablecoin
Circle, the entity responsible for issuing USDC, the second-largest stablecoin by market cap, has positioned itself as a proponent of regulatory compliance and transparency in the cryptocurrency space.
Hill’s testimony underscores Circle’s commitment to ensuring that digital assets support and uphold U.S. democratic values, especially those pegged to the U.S. dollar like USDC and USDT.
A focal point of Hill’s testimony was Tether’s relationship with Cantor Fitzgerald, a U.S. financial services company alleged to manage Tether’s substantial portfolio of Treasury bonds, estimated at $72 billion. This connection grants Tether access to the U.S. dollar, raising eyebrows about the potential for illicit activities, including terror financing.
Representative Wiley Nickel (D-North Carolina) highlighted Cantor’s controversial role, prompting Hill to affirm that the Treasury Department possesses adequate authority to act against Tether, given these significant U.S. touchpoints. To dive deeper into this development, you can find the details in this YouTube video.
Defending Integrity
Despite the allegations, Cantor’s CEO, Howard Lutnick, has defended Tether’s financial standing, asserting that the firm manages many of Tether’s assets and vouching for the accuracy of Tether’s reported funds.
This defense comes amid growing scrutiny over the use of USDT in illicit activities, particularly in East and Southeast Asia, as noted in a recent report by the United Nations Office on Drugs and Crime (UNODC).
UNODC’s ConcernsÂ
The UNODC report highlighted the preference among criminals for USDT due to its stability, ease of use, anonymity, and low transaction fees. The report pointed out the use of USDT in laundering money through illegal online gambling platforms.
However, Tether has contested these claims, emphasizing its collaboration with law enforcement agencies and the traceability of USDT transactions, which, according to the company, makes it an impractical choice for illicit financing.