XRP’s company Ripple’s CEO Brad Garlinghouse stated that it is clear the US government is targeting Tether (USDT), discussing the potential regulatory scrutiny the largest stablecoin issuer is facing. He made these remarks in a recent episode of the World Class podcast, noting that Tether’s fate is an interesting development to follow.
Garlinghouse: Regulatory Actions on Tether Could Impact the Entire Crypto Market
Garlinghouse emphasized the importance of Tether within the crypto market and highlighted the uncertain impact of regulatory actions against the company on the overall market.
Garlinghouse’s comments come amid increasing regulatory concerns surrounding stablecoins, particularly Tether, which has been scrutinized for its reserve assets and transparency practices. Tether Holdings Limited, the main company issuing USDT stablecoin, faces investigations and criticisms regarding its operations and transparency.
In response to allegations and investigations, Tether has stated its commitment to compliance and transparency, claiming cooperation with law enforcement and regulatory authorities, yet concerns about the adequacy of its reserve assets and transparency in operations persist.
The US government’s increased focus on Tether’s activities follows calls from lawmakers urging the Justice Department to assess Tether’s potential involvement in supporting illegal activities such as terrorism. These concerns have led to ongoing investigations into Tether’s activities, including an investigation by the US Attorney’s Office in Manhattan into allegations of fund concealment.
CFTC Imposed a $41 Million Fine in 2021
Tether’s past includes a 2021 incident where the US Commodity Futures Trading Commission (CFTC) fined it $41 million for misrepresenting its reserve assets. This raised questions about Tether’s ability to consistently support its stablecoin issuance with sufficient reserves.
Despite the regulatory scrutiny surrounding Tether, Garlinghouse’s Ripple is planning to enter the stablecoin market with its own US dollar-indexed stablecoin. Ripple’s stablecoin initiative aims to address concerns about transparency and reserve adequacy by backing the token with US dollar deposits, government treasuries, and other cash equivalents.
