In a recent legislative move, US lawmakers have set their sights on Tether’s parent company, iFinex, citing worries over its ties to Chinese securities. They propose a law to stop federal government officials from doing business with iFinex, aligning with the broader crackdown on Chinese blockchain companies.
Tether’s Chinese Links Uncovered
U.S. Lawmakers are alarmed after learning that Tether, the issuer of the USDT stablecoin, had links to Chinese securities. They want to pass a law preventing government officials from engaging in any deals with iFinex.
The revelation comes after public documents from New York’s Attorney General disclosed that Tether Holdings had held securities from Chinese companies in its reserves. Meanwhile, concerns are raised about supporting the USDT stablecoin, including loans to Chinese firms and Celsius Network.
Tether’s reserves, which included substantial short-term loans to Chinese firms and a significant loan to Celsius Network, sparked concerns about the assets supporting the USDT stablecoin.
While Tether previously denied involvement with China’s Evergrande Group’s debt, it had not disclosed its holdings in other Chinese securities. The US SEC has been closely monitoring Tether’s operations, mainly after reports surfaced in September about the discreet resumption of offering USDT stablecoin loans to customers.
Crackdown on Chinese Blockchain Entities
The proposed law targets Tether and extends its reach to Chinese cryptocurrency firms and blockchain networks. It seeks to prohibit government officials from engaging in transactions with Chinese crypto entities and restrict government employees’ use of Chinese blockchain networks.
This legislative move directly impacts notable companies such as The Spartan Network, The Conflux Network, and Red Date Technology, which are actively involved in BSN projects and CBDc Digital Yuan.
Why the Concerns?
Lawmakers are worried about potential risks to national security and private information. They fear China’s influence in the cryptocurrency sector could create backdoors for foreign adversaries. As blockchain tech becomes more crucial in storing sensitive data, safeguarding national security and privacy is a top priority.
With the increasing role of blockchain technology in storing sensitive private data, China’s substantial investment in this infrastructure raises concerns about national security and data privacy.
This move reflects growing concerns in Washington about Chinese influence in the crypto world. As blockchain technology plays a more significant role in handling sensitive information, protecting national security becomes crucial.