By
Temitope Olatunji
April 22nd, 2024
All the companies that supply stablecoin should answer the questions posed by the committee by December 3rd.
While US officials are struggling for transparency for stablecoins with big names like Circle and Tether, the Tether company has assured the authorities that it will comply with the policymakers in its future endeavors.
Committee Asks for Clarity
A couple of days ago, Senator Sherrod Brown wrote letters to cryptocurrency giants in order to gauge the process of minting stablecoins better. To push for more clarity, the US Senate Banking Committee asked stablecoin issuers to reveal their processes and draw an intricate conclusion from studies on how particular levels of recoveries would influence the digital currency. The Senator, who is also the Chair of the Senate Banking, Housing, and Urban Affairs Committee, sent letters to other stablecoin issuers like Coinbase, Gemini, Paxos, Trustoken, Binance, and Centre.
In the letters issued by the Senate, it was noted that the stablecoins can potentially possess risks in investor protection while heightening numerous market integrity issues. The committee has consequently, asked the stablecoin issuers to provide detailed insight involving basic purchases, minting processes, limitations as well as issuance and redemption data. Senator Brown has also addressed the CEO Jeremy Allaire, asking him to explain the vital functioning features of the USDC stablecoin.
All the companies that supply stablecoin should answer the questions posed by the committee by December 3rd.
The Response from Tether and Stablecoins Risk Concerns
The official issuer of stablecoin USDT, Tether has replied to regulatory officials saying that the cryptocurrency will work along with the authorities. In the multiple tweets posted by Tether, it has acknowledged the keenness with which the Senate is trying to gain insight into the crypto environment. In another tweet, Tether is seen pushing for the unison of the government authorities and technology pioneers.
The prompt reply by Tether was much-needed as public disobedience by any crypto network could have created a sense of fear in the crypto community. In a recent report by Bloomberg, it was alleged that Tether was under large sums of debt. While the news could have created a sense of anxiety in the USDT users, Tether has strongly denied the allegations and has insisted that their funds are soundly backed by secured assets.
In the past month, US Commodity Future Trading Commission (CFTC) slapped a fine of $41 million on Tether for deceptive claims that its USDT stablecoin was completely supported by associated fiat currencies.
While stablecoin adoption in the US is at an all-time high, Senator Brown has noticed the need for a deeper understanding of how digital assets operate along with their possible risks and limitations. The Senator, in the letters, did not forget to mention the stablecoin report brought together by the President’s Working Group (PWG).
The report was published by an influential group of US regulators who insisted the policymakers supervise stablecoin issuing firms.