Ripple CEO Warns: U.S. Targeting Tether Could Rock the Crypto Boat

YEREVAN (CoinChapter.com) — On a recent episode of the World Class podcast, Ripple CEO Brad Garlinghouse stated that the U.S. government is increasing its scrutiny of Tether, the issuer of the world’s largest stablecoin by market cap. While details were sparse, Garlinghouse was firm about the government’s focused actions.

“The U.S. government is going after Tether, that is clear to me,”

he stated, spotlighting the potential for significant market turbulence.

Garlinghouse’s concerns arise amidst Ripple’s own plans to launch a U.S. dollar stablecoin later this year, positioning them as a direct competitor in the stablecoin arena. This development could reshape Ripple’s stake in the crypto ecosystem, contingent on the fallout from any regulatory moves against Tether.

Tether’s Rocky Regulatory Road

Tether has faced a barrage of criticism and legal scrutiny. Notably, in October last year, U.S. Senator Cynthia Lummis and Representative French Hill called on the Department of Justice to evaluate Tether’s connections to possible unlawful activities.

Bloomberg reported in November 2022 that Manhattan-based U.S. Attorney Damian Williams had taken over an earlier investigation into Tether’s alleged concealment of crypto-linked funds from banks.

Additionally, Tether Holdings Limited, the parent company, has been under fire for its opaque reserve holdings. In October 2021, the Commodity Futures Trading Commission fined Tether $41 million after discovering that it had misrepresented its reserve backing for USDT on numerous occasions between June 2016 and February 2019.

Ripple’s Response

The implications of any decisive action against Tether are complex and widespread. As Tether plays a pivotal role in the crypto market’s liquidity, regulatory actions could lead to unpredictable outcomes. Garlinghouse expressed his concern, noting,

“I don’t know how to predict what impact potential U.S. regulatory action against Tether would have on the crypto ecosystem.”

In anticipation of potential market shifts, Ripple is preparing to introduce its own stablecoin, which Chief Technology Officer David Schwartz confirmed would be backed by dollar deposits, short-term government Treasuries, and other cash equivalents. This strategic move could either stabilize Ripple’s position in the market or expose it to new regulatory challenges.

Continued Vigilance and Industry Adaptation

Tether has responded to regulatory pressures by stating its commitment to transparency and cooperation with global authorities. The company has started publishing quarterly audits to verify its USDT reserves, an attempt to restore trust among users and regulators.

As the landscape of digital currencies continues to evolve, both Ripple and Tether will need to navigate the choppy waters of regulatory scrutiny while ensuring they do not alienate their user base. For investors and market watchers, these developments are crucial to monitor, as they could herald significant shifts in the crypto industry’s regulatory framework and market dynamics.

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