A Circle executive told Congress this week that she hopes the U.S. Treasury Department will consider taking action against Tether.
Caroline Hill, senior director of global policy and regulatory strategy at Circle, testified Thursday before the House Subcommittee on Digital Assets, Financial Technology, and Inclusion.
Circle issues USDC, the second largest stablecoin by market capitalization.
Rep. Wiley Nickel (D-North Carolina) asked Hill about Tether, which issues the top stablecoin USDT.
“US financial services firm Cantor Fitzgerald reportedly manages Tether’s $72 billion portfolio of government bonds, giving it access to US dollars. That Cantor enables terror and illegal activities around the world is unacceptable. Ms. Hill, given Tether’s connection to the U.S. financial system through Cantor Fitzgerald, does the Treasury Department already have the authority to take action?”
Hill say she believes the Treasury Department has the authority to take action against Tether, given the company’s “US point of contact” through Cantor Fitzgerald.
“And I hope they look at this seriously, given Tether’s reputation, as well as the data we’ve seen that they contribute to the financing of terrorism and other malign activities.”
Cantor CEO Howard Lutnick told Bloomberg in January that the company controls “a lot” of Tether assets. Lutnick also vouched for Tether’s balance sheet, arguing that they “have the money they say they have.”
In her testimony, Hill also argues that dollar-pegged stablecoins should share U.S. values.
“I personally believe that no company should use the US dollar without having these democratic values within the company, within their US dollar-backed stablecoin. And so if the Treasury Department thinks additional authorities are needed to discuss that, then I think this committee should consider that.”
In a report earlier this year, the United Nations Office on Drugs and Crime (UNODC) claimed that criminals in East and Southeast Asia prefer using USDT on the Tron (TRX) blockchain due to its stability, convenience, anonymity and low transaction costs.
The UNODC said fraudsters and money launderers tend to route the USDT through online gambling platforms that often operate illegally.
The UN report cites several examples, including Tether’s decision in November to freeze $225 million worth of USDT in certain Southeast Asian portfolios after an investigation led by the US Department of Justice (DOJ) alleged the addresses were linked engaged in ‘pig slaughter’ romance fraud. .
However, Tether pushed back against UNODC’s claims, pointing to its recent cooperation with law enforcement. The company says USDT allows “close tracking” of every transaction, making the asset “an impractical choice” for illicit financing.
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