Tether, issuer of the world’s most popular stablecoin USDT, has responded in multiple tweets saying it will work with policymakers, after the U.S. Senate Banking Committee earlier this week sent letters to several stablecoin issuers — including Tether — to inquire about their operational features.

Fast facts

  • In the tweets, Tether said it appreciates the interest from lawmakers on how stablecoins function across the cryptocurrency ecosystem.
  • “It is critical that we work collaboratively to build this industry. As pioneers of blockchain technology and leaders in transparency and innovation, Tether is dedicated [to] making sure our customers are properly protected and have the tools they need to succeed,” Tether said.
  • In Monday tweets, Ron Hammond, director of government relations at the Blockchain Association, said the stablecoin issuers include Coinbase, Gemini, Circle, Paxos, TrustToken, Centre, Binance U.S. and Tether. “This is likely a sign of an upcoming hearing,” he tweeted.
  • In the letters, the committee said stablecoins pose investor protection risks and raise several market integrity concerns, as documented in the recent report by the President’s Working Group on Financial Markets.
  • The committee requested the stablecoin issuers to offer specific information including basic purchases, minting process, limitations, as well as issuance and redemption data. The committee also asked them to “summarize any internal reviews or studies [the] company has conducted about how specific levels of redemptions would affect [the stablecoin], including its convertibility into U.S. dollars, or would affect the financial position of [the] company.”
  • The stablecoin companies are required to respond with answers to these inquiries by Dec. 3.
  • Just last month, Tether was fined US$41 million by the U.S. Commodity Futures Trading Commission (CFTC) over “untrue or misleading” claims that its USDT stablecoin was fully backed by corresponding fiat currencies. Tether later claimed the CFTC’s order “found no issues relating to Tether’s current operations” and that “these issues were fully resolved when the terms of service were updated in February 2019.”
  • Tether has been caught in a slew of troubles for the past few years. Tether and sister exchange Bitfinex settled an inquiry in February with the New York State Attorney General for US$18.5 million. The 22-month investigation examined whether Bitfinex had sought to cover up a loss of US$850 million of funds. As part of the settlement, Bitfinex admitted no wrongdoing, but agreed to provide quarterly reports on its reserves for two years.
  • “Asking for more transparency is good,” Ardoino said at the time. “Of course, people want more and more. But it’s not that we are doing nothing. People should give us time to see if we are still committed and what we can do to improve that level of transparency … Attacking now, saying that, we could have done more — yes, but look at where we were six months ago.”
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