Timothy Massad, former chairman of the Commodity Futures Trading Commission (CFTC), calls for greater regulation of Tether (USDT) and the stablecoin sector as a whole. During an interview on June 9, he noted that the United States could benefit from such a move. Massad, who served during the Obama administration, made this proposal in light of Tether’s recent agreement with the New York attorney general’s office NYAG.
In the interview, Massad acknowledged that Tether plays a significant role in the cryptocurrency market, and this has seen it grow to a market capitalization of $ 62bn (£ 43.88bn). Referring to information that Tether disclosed as part of its agreement with NYAG, it said that Tether Limited has been investing in assets where it is unclear whether it can liquidate client funds at full value and quickly enough.
Looking for quick news, tips, and market analysis? Sign up for the Invezz newsletter today.
To this end, the company manages to stay afloat when a large portion of its customer base does not demand their money back. However, according to Massad, if many investors demand his money, the company will be in a difficult position.
Tether’s asset allocation surprises
Referring again to the Tether disclosure, Massad said that 13% of the company’s assets are in secured loans. However, no one has any idea what kind of loans they are or to whom. He also went on to point out that Tether’s claim that 50% of its assets are in commercial paper doesn’t sit well with him.
Massad reportedly spoke to people dealing with commercial paper, but they are not sure if they see Tether on the market. With this in mind, he said he is not sure what commercial paper Tether is buying, adding that more disclosure is needed.
This news comes after NYAG accused Tether Limited and its sister company Bitfinex of financial mismanagement. In addition, NYAG alleged that the two companies attempted to cover the loss of approximately $ 850 million (£ 601.60 million) in customer funds. In addition to this, the bureau said that Tether had misrepresented the status of its reservations between 2018 and 2019.
In the deal, Tether and Bitfinex agreed to pay $ 18.50 million (£ 13.09 million), stop trading with New York residents, and submit quarterly transparency reports to the New York Attorney General’s office. While this might have discouraged trading around the world, Tether continued to attract new investment. Since then, the stablecoin has added more than $ 27 billion (£ 19.11 billion) to its market capitalization to become the third-largest cryptocurrency by capitalization.
Invest in cryptocurrencies, stocks, ETFs, and more, in minutes with our preferred broker, eToro
67% of retail CFD accounts lose money