Skip to main content

Tether, according to Congressman Warren Davidson, is a "time bomb."



Key points:

  • As Congress considers stablecoin legislation, one longtime cryptocurrency supporter points out an anomaly.

  • Tether is an outlier among large dollar-pegged stablecoin providers, with limited disclosures and an executive board that is nowhere to be found.

One member of Congress has identified a significant anomaly among stablecoins, which is a hot topic on Capitol Hill right now.

"Tether, for example, is a time bomb," Warren Davidson (R-OH) remarked of the financial hazards posed by stablecoins in an interview with The Block.


"There isn’t transparency or disclosure there. They acknowledge that they have commercial paper, but they don’t disclose what exactly that is. That’s where I think that a framework that compels disclosure does provide investor protection.”

"Regulators ought to get their arms around Tether," Davidson added, referring to a contentious Securities and Exchange Commission enforcement action. To be honest, there's a lot more justification for the SEC to be looking into Tether than Ripple and XRP."


The fact that Davidson is not an alarmist when it comes to crypto policy is very noteworthy. Since taking over for John Boehner as the representative for Ohio's 8th district in 2016, he has been one of crypto's most vocal supporters on Capitol Hill.


Davidson is a member of the Congressional Blockchain Caucus and the House Financial Services Committee, which will be debating the President's Working Group on Financial Markets' report on stablecoins later today. The session will be led by Nellie Liang, the Treasury's undersecretary for domestic finance, who is expected to press for the PWG's suggestion that Congress limit stablecoin issuance to insured depository institutions - principally banks.


It's a structure that's been criticised from both sides of the aisle. The ban on insured depository institutions, for example, did not sit well with Davidson. Democratic workers have also expressed displeasure with the idea of giving incumbent banks an advantage.

Tether, the largest stablecoin operator, remains the proverbial elephant in the room while the regulatory framework for stablecoins is still being worked out. Tether, which has been chastised for its lack of operational openness, has also been conspicuously absent from policy conversations in the United States, including those involving other stablecoin issuers.

Sherrod Brown, the chair of the Senate Banking Committee, has had trouble reaching Tether about their business practises. Tether is now battling CoinDesk over the contents of a recent settlement with the New York Attorney General, which prevented Tether and its sibling exchange Bitfinex from functioning in the state.

"Unfortunately, because Bitfinex does not do business in the United States, we do not deal with US-based journalists," a Tether official told The Block recently. As of press time, another spokesperson had not responded to a request for comment.

Comments

Popular posts from this blog

The IRS will not tax unsold cryptocurrency tokens, which is a huge relief for cryptocurrency traders and miners.

 Crypto staking and mining enthusiasts can finally exhale a sigh of relief, as the IRS has decided not to tax unrealized gains from crypto staking or mining digital assets. This is a huge relief because many crypto supporters have been speaking out against these proposed taxes over the last few months. Blockworks' Casey Wagner was the first to report on this storey. She claims that a Nashville couple will receive a tax refund for unsold Tezos tokens staked on the blockchain network. This clarifies how cryptocurrencies that have been staked are taxed. According to people familiar with the situation, the IRS has offered the couple a refund for earned but unredeemed rewards. According to a legal complaint filed on May 26, 2021, Joshua and Jessica Jerrett requested a refund of $3,293 in income tax paid in 2019 for the receipt of 8,876 Tezos tokens in May 2021 with the US District Court for the Middle District of Tennessee. In addition, the couple requested a $500 increase in tax credit...

DogeCoin (DOGE) Overtakes Terra (Luna) As The World's 10th Largest Cryptocurrency

In terms of market capitalization, Dogecoin (DOGE) has surpassed Terra (LUNA) to become the tenth largest cryptocurrency. The switch follows the accompanying drama in the Terra ecosystem, which has seen the price of the LUNA tank plummet in recent days. LUNA has dropped 28.16 percent in the previous week and is now trading at more than 50% below its all-time high set in December. The battle for supremacy between DOGE and LUNA continues to heat up. According to CryptoRank, Dogecoin has surpassed Terra (LUNA) in market capitalization once again. DOGE has a market cap of roughly $18.22 billion, while LUNA has a market worth of around $18.20 billion. Market participants, on the other hand, are pointing out that the switch was caused by a panic selloff in the LUNA market, not by a boom in DOGE. In the last seven days, the price of DOGE has increased by 1.04 percent. In the same time period, however, LUNA has dropped 28.16 percent. According to Krypto Tribe tracker Santiment, the depletion h...

Solana (SOL) Price Prediction: Will the Price of Solana (SOL) Break $120 Next?

  On Saturday, the price of Solana (SOL) appears to be exhausted near the higher levels. As accumulation increases near the demand zone, buyers stayed committed to the coin for about $88.0. The price pushed near $115.0 due to the unwavering strong sentiment. After testing two-week highs, the price of Solana (SOL) halted. If SOL breaks through $120 in the near term, expect more gains. At $145.0, the price is still trading below the 200 DMA. The price of SOL is still under pressure around two-week highs. On the daily chart, the formation of "Doji" candlesticks on Thursday following the bulls' rejection near the higher levels indicates that investors are not ready to give up on the coin easily. In a retaliatory action, the price tested the same level once more. This is a critical trading level, and acceptance above $120 is required for traders to maintain upside momentum. Source: Trading View The momentum oscillator Daily Relative Strength Index (RS...