An investor analyzing the price of tether, the token coin $USDT on a crypto exchange screen. Source: maurice norbert - stock.adobe.com

Key Takeaways:

Ripple CEO’s Concerns: Ripple CEO Brad Garlinghouse voiced concerns about U.S. authorities specifically targeting Tether, which could significantly impact the broader cryptocurrency market.
Tether’s Role and Scrutiny: Tether plays a pivotal role in the crypto ecosystem, and its operations are under increased scrutiny from U.S. regulators, affecting its stability and operational transparency.
Ripple’s Stablecoin Development: Amid these regulatory challenges, Ripple is preparing to launch its own stablecoin in 2024, backed by diversified assets including dollar deposits and government securities.

Ripple CEO Brad Garlinghouse expressed concerns in a recent podcast about the U.S. government’s scrutiny of Tether, the issuer of the world’s largest stablecoin by market capitalization.

Speaking on the May 10 episode of the World Class podcast, Garlinghouse indicated that it was evident the U.S. authorities are targeting Tether, a move he believes could significantly influence the cryptocurrency markets.

Ripple CEO Brad Garlinghouse: The US Government is going after Tether (USDT issuer). That is clear to me. I view Tether as a very important part of the ecosystem and I don’t know how to predict the impact it would have on the rest of the ecosystem. https://t.co/fJ6RME6TN1
— Wu Blockchain (@WuBlockchain) May 13, 2024

During his appearance, Garlinghouse mentioned, “The U.S. government is going after Tether, that is clear to me,” though he refrained from speculating on potential outcomes, instead describing the situation as one to closely monitor.

He emphasized the critical role Tether plays within the crypto ecosystem and admitted the difficulty in predicting the effects of possible regulatory actions against it.

This discussion comes at a time when Ripple is preparing to introduce its own stablecoin in 2024.

Garlinghouse’s comments underscore the uncertainty surrounding Tether and its operations, which have been under increasing scrutiny.

In October 2023, prominent U.S. legislators urged the Justice Department to assess the extent to which companies like Binance and Tether could be involved in supporting unlawful activities.

In response to these allegations, Tether has maintained its commitment to cooperating with global law enforcement agencies and upholding high compliance standards.

TETHER CEO DEFENDS AGAINST RIPPLE CEO'S CLAIMS OF US GOVERNMENT SCRUTINY: WHAT WE KNOW

– Tether CEO Paolo Ardoino has responded to comments made by Ripple CEO Brad Garlinghouse in a recent X post, who suggested that the US government is intensifying its scrutiny of Tether.

-… https://t.co/MVC7VBRIVV pic.twitter.com/NBjnfPLc8g
— BSCN (@BSCNews) May 13, 2024

The company, through its various international subsidiaries, manages the issuance and operations of the USDT stablecoin.

It has faced criticism over the transparency of its reserve holdings but has started to publish quarterly third-party audits in recent years.

The regulatory landscape for cryptocurrencies continues to evolve, with Tether having previously settled a $41 million fine with the Commodity Futures Trading Commission for misrepresenting its reserve holdings.

As the crypto community watches these developments, Ripple’s own plans for a stablecoin are set to add another layer to the complex dynamics of the cryptocurrency market.

Ripple to Launch USD-Backed Stablecoin in June? CTO David Schwartz Hintshttps://t.co/KzimrX1LX8
— Jack Straw (@JackStr42679640) May 9, 2024

The company’s CTO, David Schwartz, noted that their stablecoin would be backed by a mix of dollar deposits and short-term government securities, among other assets.