US senator demands greater transparency from stablecoin operators

Concerns centre on lack of right and entitlements afforded to customers

Senator Sherrod Brown                                 
Senator Sherrod Brown writes to Tether, Coinbase and Gemini - Photo:Shutterstock
                                

The Chairman of the US Senate Banking Committee has written to the operators of leading stablecoins, asking for greater insight into their practices. 

Writing to Tether Holdings, the operator of the world’s most popular stablecoin, Senator Sherrod Brown stated: 

“I have significant concerns with the non-standardized terms applicable to redemption of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.”

Brown stated that his primary concern centred on lack of right and entitlements afforded to customers using currency-pegged stablecoins in comparison to users of the traditional media of exchange. 

He added that the broad way in which the term stablecoin is used could lead to some users not appreciating “the complexity and distinct features and terms of each stablecoin.”

Customer rights

Among other requests, the Democratic politician asked the company to detail its process for redeeming USDT and receiving US dollars, the conditions that would prevent the purchase of the stablecoin for US dollars and whether any trading platforms have special arrangements with respect to the Tether. 

Tether operations

While similar letters were written to the likes of Coinbase, Gemini, Binance.US, Centre, Paxos and TrustToken, observers and crypto investors will pay close attention to the answers Tether provides in response. 

USDT, which has a market capitalisation of $72.4bn (£54.3bn), is supposed to maintain a 1-1 peg with the US dollar via an elastic supply structure. However, questions have been raised in recent years as to the location of its reserve funds. 

In February, the company agreed to pay $18.5m to settle a suit brought in New York in which it was accused of covering up $850m of losses and of lending out investor funds to cryptocurrency businesses. 

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image