Paolo Ardoino, CEO of Tether, reflected on the shifting regulatory environment while flying over Switzerland recently. Once considered an adversary to the financial establishment, Tether is increasingly aligning with it.
Over the past four years, Tether’s journey has transformed significantly. The company, which is now the most-traded cryptocurrency globally, faced challenges when banks moved away from it and New York regulators scrutinised its financial practices. Concerns were raised about the use of dollar-backed cryptocurrencies without adequate oversight. Federal inquiries also examined Tether for potential regulatory violations related to anti-money laundering.
Ardoino pointed out that Tether’s leadership had to navigate these challenges, seeking partners willing to engage with them. Tether’s business operations are substantial, with it ranking as the 17th largest holder of US government debt, directly supporting its one-to-one peg with the US dollar. Investors in countries experiencing hyperinflation, such as Turkey and Argentina, rely on Tether to protect their savings, while crypto traders use it for asset preservation.
The evolving relationship between Tether and law enforcement showcases a gradual governmental shift, despite the Biden administration’s aggressive stance on cryptocurrencies. Ardoino asserted that Tether has always operated transparently, acknowledging past missteps in communication that left room for misunderstanding and mistrust.
Following a settlement with New York regulators in 2021, Tether adopted a more proactive approach, increasing transparency through regular financial disclosures and improved cooperation with the government. Now, under the Trump administration, Tether enjoys a more established standing, with CEO of Cantor Fitzgerald, Howard Lutnick, advocating for complete backing of US dollar stablecoins by US treasuries.
Concerns have been raised regarding illicit activities tied to Tether, but Lutnick defended the currency by drawing parallels to the misuse of US dollars, asserting that Tether works closely with law enforcement to address any issues promptly.
Ardoino stressed that Tether’s collaboration with over 200 law enforcement agencies demonstrates its commitment to preventing misuse, claiming that the traditional banking system is often less efficient at addressing such issues. He also acknowledged potential threats from regulatory hostility, particularly in the US and Europe, noting that Tether has been removed from exchanges compliant with forthcoming EU regulations.
Looking ahead, Ardoino expressed hope that upcoming regulatory frameworks would be more conducive to the cryptocurrency industry, expecting clarity from the new administration on regulations by September. His outlook illustrates a proactive stance in navigating the changing landscape of cryptocurrency regulation while reaffirming Tether’s centrality in the market.