The world’s leading stablecoin issuer, Tether, has been in talks with U.S. lawmakers regarding regulation of stablecoins under the proposed STABLE Act. The company desires to be a key stakeholder in shaping the legislative environment for stablecoins in the country.
Tether in Talks with Legislators
According to FOX Business news reporter Eleanor Terrett, Tether has been in talks with Rep. Bryan Steil and Republican House Financial Services Committee Chair French Hill on the forthcoming Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. The act will probably enact strict requirements on stablecoin issuers, like securing approval from the Office of the Comptroller of the Currency (OCC) and collateralizing the stablecoins in traditional fiat, short-term U.S. Treasury bills, or central bank reserves.
Tether’s Compliance Priority
Tether CEO Paolo Ardoino emphasized the company’s compliance priority by stating:
We are not going to just give up and let Tether die for the sake of non-compliance with U.S. laws alone.”
If the STABLE Act is passed into law, Tether will be required to maintain one-to-one asset backing for its stablecoins and conduct monthly reserve audits by a U.S.-based accounting firm.
Transparency Concerns and Market Implications
Tether has also been under fire on the issue of transparency, particularly with regard to a lack of a full audit. The firm has instead chosen to utilize quarterly audits by global accounting firm BDO. JP Morgan analysts have further speculated that Tether may have to sell portions of its reserves of Bitcoin to comply with new regulatory requirements, estimating that the firm now retains only 66% to 83% of the reserves that it requires.
Wider Legislative Initiatives on Stablecoins
Tether’s regulatory involvement takes place during increased legislative activity within the stablecoin arena. The U.S. Congress saw the filing of three influential stablecoin bills over the course of one week:
STABLE Act – Stressing disclosure and regulation.
GENIUS Act – Bipartisan legislation to control stablecoins whose market value is more than $10 billion.
Democratic Oversight Proposal – Filed by Rep. Maxine Waters, involving more than one federal agency.
Federal Reserve Governor Christopher Waller recently cited the promise of stablecoins in bolstering the global supremacy of the U.S. dollar but said this hinges on a successful regulatory framework. In similar fashion, Fed Chairman Jerome Powell has sounded hopeful regarding stablecoin regulations, capitalizing on the increased scrutiny of the sector.
Future of Tether in the US Market
Ardoino reiterated that Tether would like to play an active role in supporting all stablecoin regulations in order to get its voice into the mix:
“We are going to operate inside of the regulatory structure, and we are going to attempt to consult on every one of these field proposals in order to ensure that our voice is heard.”
As regulation for stablecoins continues to evolve, Tether’s position in the conversation with lawmakers will play a significant role in shaping the industry’s future.
