Tether, the issuer of the world’s largest stablecoin by market cap, is facing increased scrutiny from the U.S. government, according to Ripple CEO Brad Garlinghouse. In a recent episode of the World Class podcast, Garlinghouse expressed his concerns about the government’s actions against Tether. This comes at a time when Ripple is planning to launch its own U.S. dollar stablecoin, which could potentially reshape its position in the crypto ecosystem.
Tether has been under fire for some time, facing criticism and legal scrutiny. U.S. Senator Cynthia Lummis and Representative French Hill called on the Department of Justice to evaluate Tether’s connections to possible unlawful activities. In addition, the Manhattan-based U.S. Attorney Damian Williams has taken over an investigation into Tether’s alleged concealment of crypto-linked funds from banks.
Tether Holdings Limited, the parent company, has also been criticized for its opaque reserve holdings. The Commodity Futures Trading Commission fined Tether $41 million for misrepresenting its reserve backing for USDT on multiple occasions.
In response to the potential regulatory actions against Tether, Ripple is preparing to launch its own stablecoin. Chief Technology Officer David Schwartz confirmed that the stablecoin would be backed by dollar deposits, short-term government Treasuries, and other cash equivalents. This move could either stabilize Ripple’s position in the market or expose it to new regulatory challenges.
Tether has tried to address regulatory pressures by committing to transparency and cooperation with global authorities. The company has started publishing quarterly audits to verify its reserves, hoping to restore trust among users and regulators.
As the crypto industry continues to evolve, both Ripple and Tether will need to navigate regulatory scrutiny while maintaining their user base. These developments will be important to monitor as they could bring significant changes to the regulatory framework and market dynamics of the crypto industry.