US Legislators Propose Bill to Prohibit Business with iFinex
On November 8, U.S. legislators introduced a bill that aims to prevent federal government officials from conducting business with iFinex, the parent company of USDT stablecoin issuer Tether. This move comes as part of the US government’s efforts to crack down on Chinese blockchain companies.
Tether’s Chinese Securities Exposure
Earlier this year, reports revealed that Tether had exposure to Chinese securities and other firms based in China. Documents from New York’s Attorney General disclosed that Tether Holdings Ltd., the issuer of the world’s largest stablecoin, USDT, had previously held securities from Chinese companies in its reserves. This revelation follows years of scrutiny and concern about the assets backing Tether’s stablecoin.
It was also discovered that Tether’s reserves included substantial short-term loans to Chinese firms and a significant loan to cryptocurrency platform Celsius Network. Although Tether had previously denied any involvement with China’s troubled Evergrande Group, it had not disclosed its holdings of other Chinese securities.
In September, a report suggested that Tether began offering USDT stablecoin loans to customers secretly a year after pledging to stop providing secured loans.
Crackdown on Chinese Blockchain Firms
US lawmakers have proposed legislation that would prohibit government officials from engaging in transactions with Chinese cryptocurrency firms and prevent government employees from using Chinese blockchain networks supporting cryptocurrency trading platforms.
This legislation would impact companies such as The Spartan Network, The Conflux Network, and Red Date Technology involved in BSN projects and CBDc Digital Yuan. According to the lawmakers, this move aims to ensure that foreign adversaries do not gain access to critical national security intelligence and Americans’ private information.
Hot Take: Implications for Cryptocurrency Regulation
The bill prohibiting federal officials from doing business with iFinex shows the growing concerns about ties between Chinese entities and the cryptocurrency sector. As more regulatory measures are proposed and enacted, it is clear that governments are taking steps to protect national security interests in light of China’s significant investment in blockchain technology.
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