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.