The US Senate Committee on Banking, Housing, and Urban sent a letter to the so-called “stablecoin “ release of Tether Tuesday, asking to explain how the company works with “mints” tethers that can be exchanged with various forms of cryptocurrency like bitcoin. Why is it important? Because some people believe that Tether is not a fraud, they worry that a possible Tether collapse as a digital currency could cause the entire cryptocurrency market to collapse.
A letter to Tether, addressed to CEO Jean-Louis van der Velde, was led by Senator Sherrod Brown, a Democrat from Ohio, who expressed concern that, “stablecoins are at risk of protecting businesses and raising a number of concerns in the market.” It is a polite way to say this in a wonderful way sketchy industry has been too big for its britches.
Stablecoins like tethers are nailed to the US dollar and consciously buyers can exchange one US dollar for one tether. Why would anyone want to do this? Stablecoins are widely used in crypto currency exchanges, which are difficult to purchase and are often required middle income.
As Bloomberg News reported in October, there were 69 billion tethers published, meaning that Tether as a company must have $ 69 billion in US currency or something similar. That amount is $ 73 billion and is growing. And it probably won’t cost much.
If Tether the company had a lot of money around it, could make it one of the largest banks in America. But a of course they may not it means that there is something very worrying going on — something that could have the potential to disrupt the cryptocurrency market, which is so large that it could disrupt the financial system.
“I am very concerned about the volatile terms that work in exchange for other stablecoins, how the term differs from the traditional economy, and how the term may not coincide on digital trading platforms,” Sen. Brown in his words. letter to Tether.
Brown’s letter contains six questions:
- Please describe the starting point of purchase, exchange, or repair[es] how customers can get Tether for US dollars. In your answer, state any restrictions or qualifications to participate and complete the activity.
- Please specify the details of the Tether redemption process and receive US dollars. Again, note any requirements or limitations, including redemption size, waiting period, or qualifications.
- Since the inception of Tether, how many Tether symbols have been given, and how many have been redeemed? In the last 12 months, what is the largest portion of Tether published at the beginning of the calendar week that will be released in the next seven days?
- Please be aware of any commercial sites that have significant potential, opportunities, or special arrangements related to Tether, identifying the products and their basics (such as corporate or public domain).
- Please briefly review any internal comments or studies that your company conducted on how the exchange could affect Tether, combine its conversion into US dollars, or affect your company’s performance.
Tether is not the only one that offers stablecoin on Seante appearances, one of the most important. Brown as well sent letters to Coinbase, Gemini, Paxos, TrustToken, Binance.us and Center.
So what’s going on? All right, we’re waiting. Tether has 10 days to respond to the letter, according to the Senate. And Mr. Brown soon realized that he wanted to hear the answers “clearly, straightforwardly.”
What challenges did CEO Jean-Louis van der Velde address by December 3? Not good. Not seen or heard from a a very long time.