U.S. Senator asks the people behind Tether to give answers

A picture of an article titled by the U.S. Senator asking the people behind the crypto stablecoin Tether to give answers

Photo: STRF/STAR MAX/IPx 2021 (Associated Press)

The U.S. Senate Committee on Banking, Housing and Cities sent a letter to the so-called “Stablecoin” On Tuesday, the issuer Tether asked for an explanation of how the company operates and “minted” Tether that can be exchanged for various forms of cryptocurrency (such as Bitcoin). Why does this matter? Because some people think that Tether is not only committing fraud, but they are worried that the collapse of Tether as a form of digital currency may cause the entire cryptocurrency market to fall.

This letter to Tether CEO Jean-Louis van der Velde was led by Ohio Democratic Senator Sherrod Brown, who expressed concern that “stable coins will bring investor protection risks and cause some market integrity issues”.This is a polite way of expression, incredible Rough industry It has become too big.

Like stablecoin The tether is linked to the U.S. dollar. In theory, consumers can exchange one dollar for a tether. Why would anyone want to do this?Stablecoins are most commonly used to exchange cryptocurrencies, which can be difficult to buy and usually require An intermediary currency.

As Bloomberg News reported October, Have There are 69 billion Tethers in circulation, which means that Tether, as a company, should hold 69 billion U.S. dollars or equivalent currencies. This number is 73 billion U.S. dollars, and it’s still growing. And it is almost certain that it does not hold that much money.

If Tether does have so much real money, Which will make it one of the largest banks in the United States.But the In fact it Maybe not This means that something deeply disturbing is happening-it may be capable of disrupting the cryptocurrency market, which is large enough to potentially disrupt the traditional financial system.

“I am very worried about the non-standardized terms that apply to the redemption of specific stablecoins, how these terms are different from traditional assets, and how these terms may be inconsistent among digital asset trading platforms,” ​​Senator Brown said in his Letter to Tether.

Brown’s letter includes six questions:

  1. Please describe the basic purchase, exchange or casting process[es] Customers can use it to buy Tether in U.S. dollars. In your answer, explain any relevant restrictions or qualifications to participate and complete the process.
  2. Please elaborate on the process of exchanging Tether and receiving USD. Here, also determine any requirements or restrictions, including any minimum redemption size, waiting period or eligibility.
  3. Since the establishment of Tether, how many Tether tokens have been issued and how many have been redeemed? In the past 12 months, what was the maximum percentage of Tether in circulation at the beginning of the calendar week redeemed in the following 7 days?
  4. Briefly describe the market or operating conditions that would prevent the purchase or redemption of Tether in U.S. dollars or other digital assets. To answer this question, please do not list or describe the legal or regulatory restrictions currently described in the user agreement or terms of service. For each situation identified, please provide at least one example that occurred in the past 12 months and its duration.
  5. Please identify any trading platform with enhanced capabilities, privileges or special arrangements in Tether, and determine these characteristics and their basis (for example, contracts or joint control).
  6. Please summarize any internal review or research that your company has conducted on how specific redemption levels will affect Tether (including its convertibility into U.S. dollars) or will affect your company’s financial situation.

Tether is not the only stablecoin issuer in the eyes of Sente, but one of the most important issuers.Brown also Send a letter Coinbase, Gemini, Paxos, TrustToken, Binance.us and Centre.

What will happen now? Well, let’s wait. According to the Senate, Tether has ten days to respond to this letter. Brown was quick to point out that he would like to hear a “clear and straightforward” response.

How likely is it that CEO Jean-Louis van der Velde will respond before December 3rd? Not very good.He was not seen or heard a long time.

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