Pressure has been mounted against the top stablecoin (Tether USDT) by regulatory bodies.. The authorities and investigatory bodies are shifting their focus to the commercial paper reserve. Regulators have been investigating to determine what encompasses Tether’s reserve protocol.
A team of regulators lead by Janet Yellen, the US Treasury Secretary has been assigned to address dollar-based stablecoins. It has been widely reported that Yellen has been vocal in her assessment of the potential risks that stablecoins possess. The investigation is being undertaken by the “Presidents Working Group on Financial Market” to ascertain the accuracy of the reported paper reserves claimed by Tether (USDT). Debt securities such as commercial papers are issued by firms to investors to facilitate short-term funding.
The Working Group are reluctant to believe the claims made my Tether (USDT) as their protocol is comparable to a mutual fund that can be subjected to capitulation and investments has the potential to fall to zero. Currently, there are approximately 62 billion Tether (USDT) in circulation leading to a legitimate cause for concern.
Over the course of the last two months, Tether have revealed elements of its reserve composition in attempts to be transparent, through a complete audit. Tethers report detailed, it had a varied reserve protocol which went far beyond cash stockpile with it also comprised of bonds, secured loans, commercial papers and even Bitcoin (BTC) which has recently scaled the $40k price.
However, Yellen recently contacted lawmakers to further establish policies that will govern dollar backed stablecoins and similar FIAT based protocols in the financial market. Following the pressure by Yellen and regulators for governance for stablecoins correspondence between Yellen and Senator Elizabeth Warren to tighten their understanding and control over cryptocurrency. Warren’s position represents considerable control over the United States financial system, and she has been vocal in her opposition to cryptoassets previously stating that more security and a better service will be implemented by handing over the financial systems to mainstream conventional banks over anonymous individual and coders.