Members of Congress are debating new stablecoin legislation, and it’s apparent that they don’t wish a repeat of the stablecoin Tether.
The House Financial Services Committee as well as the Senate Banking Committee has already been hearing information on stablecoins from Treasury undersecretary Nellie Liang. These two hearings, one this week and the other next week, are all in response to the President’s Working Group on Financial Markets’ study on stablecoins, which Liang chaired.
The PWG paper focuses primarily on the dangers that unsupportable or under-backed stablecoins may provide to shareholders who possess them. This has been a major worry among those researching the topic. Despite the fact that the study did not name individual companies, Tether was on several politicians’ minds.
Tether’s Concern with Stablecoin Producers
Panel officials particularly mentioned Tether as a cryptocurrency not entirely supported in briefing documents seen by The Block. They stated that other difficulties that consumer security is not completely guaranteed by backup money.
Warren Davidson, who also serves on the Financial Services Committee, has previously expressed his concerns to The Block. Brad Sherman called awareness towards the reality that Tether didn’t actually make an appearance at a conference in December with officials from other major stablecoin producers.
As stablecoins make their way well before Senate Banking Committee on February 15, those issues, as well as others, would be vivid in the minds of senators.
There’s also the possibility that the panel’s chairman, Sherrod Brown, was angry when he tried to phone Tether’s leadership. As recently as February, Brown’s department would inform The Block if they had received responses from all of the issuers contacted.
On February 9, another participant in a meeting of the Senate Agriculture Committee, during which Brown appeared unexpectedly. Kevin Werbach, a University of Pennsylvania professor, filed a case with the court. He said that the stablecoin Tether keeps playing an oversized position in the electronic asset sector.
Tether’s Holdings
Tether claimed in a response to The Block that this has pioneered the road in sharing clarity of assets. The company also highlighted its most recent attestations, which showed a marked decline in commercial paper investments in percentage figures. There has been a reduction in commercial paper exposure as a result of community engagement.
Over 40% of Tether’s reported holdings are still held in unknown commercial paper. The company’s spokespeople did not answer The Block’s demand for a timeline. A thorough investigation, which the company’s management has maintained is coming for decades.
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