On Wednesday, November 8, U.S. legislators presented a bill that prohibits federal government officials from engaging in business with iFinex, the parent company of USDT stablecoin issuer Tether. The development comes as the US government announces a crackdown against Chinese blockchain firms.
Tether, China and US Lawmakers
As per reports earlier this year, Tether has been having exposure to Chinese securities and other Chinese firms. New York’s Attorney General has made public documents that disclose Tether Holdings Ltd., the issuer of the world’s largest stablecoin, USDT, previously held securities from Chinese companies in its reserves. This revelation follows years of inquiry and concern about the assets supporting Tether’s stablecoin.
Tether’s reserves encompassed substantial short-term loans to Chinese firms and a significant loan to the cryptocurrency platform Celsius Network. Tether had previously denied any involvement with the debt of China’s troubled Evergrande Group but had not revealed its holdings of other Chinese securities.
Further, the US SEC is also keeping a close watch on Tether’s operations. In September, a report suggested that the company began offering USDT stablecoin loans to customers secretly a year after Tether Holdings pledged to cease providing secured loans.
The latest move underscores Washington’s growing concerns about Chinese connections within the cryptocurrency sector, as stated by the bill’s sponsors.
Cracking Down on Chinese Blockchain Firms
US lawmakers have proposed a law that would prohibit government officials from engaging in transactions with Chinese cryptocurrency firms and prohibit government employees from using Chinese blockchain networks, which support cryptocurrency trading platforms.
Chinese companies such as The Spartan Network, The Conflux Network, and Red Date Technology, which are involved in BSN projects and CBDc Digital Yuan, would be affected by this legislation.
In a statement on Wednesday, the lawmakers said that the aim of this latest legislation is to ensure the nation’s “foreign adversaries … do not have a backdoor to access critical national security intelligence and Americans’ private information”.
In the coming decade, blockchain technology is likely to store sensitive private data for every American, making China’s significant investment in this infrastructure a major concern for national security and data privacy, the lawmakers noted.
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