Tether is in some bother with the SEC. It has the President’s Working Group on Financial Markets, an organization composed of the SEC, the CFTC, The Fed and The US Treasury announcing late last year that stablecoins, which include Tether should be considered as securities.  If Tether is indeed classified by the SEC as a security, then it could be sued by them for not registering its USDT as such.

Couple that with another threat from the Stable Act which recommends stablecoin issuers having to comply with a US banking charter, in order to “protect consumers from the risks posed by emerging digital payment instruments” and you have a potential catastrophe on the line for Tether and other major stablecoins. If Tether does get a fatal blow on the head from these two threats, then this could have an impact on the cryptocurrency market at large and certainly on the other stablecoins.

The Stable act seeks to make 4 major reforms, all with the goal of cracking down on stablecoins and other cryptos. These include:

  • Any issuer of a stablecoin must first obtain a banking charter;
  • Companies proffering stablecoin services to comply with necessary banking regulations under the current regulatory jurisdictions;
  • Any issuer of a stablecoin gets permission from the Fed, the FDIC, and the appropriate banking agency six months ahead of issuing and to conduct ongoing risk and impact analysis.
  • All stable CHIP, which rather than being a tradable asset that could be classed as a security, is rather a transactional token for enterprise use cases.  These include industries like online gaming, esports, and gambling – three areas that have seen an explosive influx of users during the coronavirus lockdowns. These operators then would not need to create their own tokens nor hold their own reserves against other stablecoins, the CHIP does it for them. The CHIP token is issued on ERC20 Ethereum and it is tracked by the BXTB token to generate actual yield for the holders. Perhaps with solutions like these, there is some wiggle room for new innovative stablecoins that slip under the regulators’ radar.

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