A Circle Executive Urges US Treasury Department to Investigate Tether
A senior director at Circle, a US financial services company that issues the stablecoin USDC, testified before Congress this week, suggesting that the US Treasury Department should take action against Tether. Caroline Hill spoke before the House Subcommittee on Digital Assets, Financial Technology, and Inclusion and expressed her hope that the Treasury Department would investigate Tether due to its association with Cantor Fitzgerald. Cantor Fitzgerald reportedly manages Tether’s $72 billion portfolio of Treasury bonds, providing them with access to US dollars. Hill believes that Tether’s reputation and alleged involvement in terrorist financing and illicit activities warrant serious consideration from the authorities.
Concerns About Tether’s Nexus to the US Financial System
During the hearing, Representative Wiley Nickel raised concerns about Tether’s connection to the US financial system through Cantor Fitzgerald. Hill confirmed that she believes the Treasury Department has the authority to take action against Tether given its “US touchpoint” via Cantor Fitzgerald. She emphasized that companies referencing the US dollar in their stablecoins should uphold democratic values within their organizations. Hill suggested that if additional authorities are required for the Treasury Department to regulate this aspect, the committee should consider granting them.
Tether’s Controversial Reputation and UNODC Report
The controversy surrounding Tether extends beyond its association with Cantor Fitzgerald. The United Nations Office on Drugs and Crime (UNODC) recently reported that criminals in East and Southeast Asia prefer using Tether’s stablecoin USDT on the Tron blockchain due to its stability, ease of use, anonymity, and low transaction fees. The report stated that fraudsters and money launderers often funnel USDT through illegal online gambling platforms. However, Tether disputed these claims by highlighting its collaboration with law enforcement and asserting that USDT enables meticulous tracking of transactions, making it an impractical choice for illicit financing.
Conclusion
As the stablecoin industry faces increased scrutiny, Circle is urging the US Treasury Department to investigate Tether. The company’s representative argues that Tether’s connection to the US financial system through Cantor Fitzgerald warrants serious consideration, given its alleged involvement in terrorist financing and illicit activities. Additionally, concerns have been raised about stablecoins referencing the US dollar without upholding democratic values. While Tether has pushed back against accusations of facilitating illegal activities, a UNODC report suggests criminals in certain regions prefer using USDT for illicit purposes. The outcome of any potential investigation by the Treasury Department could have significant implications for the stablecoin market.
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