USDT Regulatory Clarity Delayed as Senate Blocks Stablecoin Bill
The U.S. Senate’s failure to advance stablecoin legislation has left the crypto industry in limbo, with major stablecoins like USDT and USDC facing prolonged regulatory uncertainty. The 48-49 vote fell short of the required 60 votes, highlighting Democratic opposition despite earlier bipartisan support. This setback delays much-needed clarity for the $150B+ stablecoin market and raises questions about the timeline for comprehensive crypto regulation in 2025.
Senate Blocks Stablecoin Bill Advancement Amid Democratic Opposition
The U.S. Senate failed to advance stablecoin legislation in a 48-49 vote, falling short of the 60 votes required to proceed. The bill, which had previously gained bipartisan support in committee, faced sudden Democratic resistance. This delays regulatory clarity for major stablecoins like USDC and USDT.
The crypto industry’s hopes for legislative progress this year now hinge on overcoming congressional gridlock. Market participants had anticipated this bill as the first of two key digital asset regulations moving forward in 2024.
Tether Accused of Using Borrowed Funds to Back USDT Stablecoin
A viral post by crypto analyst Deso has cast doubt on the stability of Tether, the world’s largest stablecoin. The allegation suggests Tether may not be fully backed by US dollars but instead relies on borrowed funds, creating systemic risk for the crypto market.
The analysis describes a Ponzi-like structure where firms borrow money to purchase USDT, convert it into cryptocurrencies like Bitcoin, then sell for dollars to repeat the cycle. This mechanism could collapse if market demand wanes or prices decline, potentially leaving lenders unpaid.
Tether’s recent activities in El Salvador have further raised questions about its operations. The stablecoin’s purported $1 peg faces scrutiny as the alleged borrowing scheme undermines claims of full dollar backing.
Tether Faces Renewed Scrutiny Over Reserve Backing Practices
Tether’s USDT stablecoin, a cornerstone of the crypto ecosystem with a $150 billion market cap, faces fresh allegations about the integrity of its dollar peg. Analyst Deso’s viral social media analysis suggests reserves may rely on borrowed capital and financial engineering rather than cash holdings—a claim that could destabilize markets if proven true.
The controversy echoes longstanding skepticism about Tether’s transparency. Market participants now watch for Ripple effects across exchanges and paired assets, as USDT serves as primary liquidity for countless crypto trading pairs. Stablecoin reliability remains critical amid recent institutional adoption trends.
