In recent years, USDT, as a stablecoin pegged to the US dollar, has played an important role in the cryptocurrency market. The market share of Tether, the issuer behind it, increased by 21% in 2023 and now accounts for 2/3 of the stablecoin supply. The number of stablecoins in circulation exceeds 95 billion, which has even exceeded the gross domestic product (GDP) of countries such as Guatemala and Bulgaria.
However, in recent days, USDT and the US dollar have been in a shallow decoupling trend that has not recovered for many days. On Tuesday, USDT was quoted at 0.9993 against the US dollar, a drop of 0.13% in 7 days. The emergence of this phenomenon may be related to the news that the United States will pass a stable currency bill this year and the heavyweight accusations of the United Nations.
The United Nations Office on Drugs and Crime warned in a report released on Monday that Tether, the maker of the world's largest stablecoin USDT, has become one of the main payment methods for money launderers and scammers in Southeast Asia.
Despite widespread law enforcement crackdowns on digital assets in the United States and elsewhere, criminal groups continue to use Tether's tokens as an effective way to transfer funds, so much so that some casinos have begun to specialize in handling the tokens. For example, a money laundering group in Shan State, Myanmar, which has been operating in Cambodia, even hung a sign on a busy street to promote Tether and promised to exchange "black money" tokens for cash.
Jeremy Allaire, CEO of Circle, the issuer of the USDC dollar stablecoin, said in an interview at the World Economic Forum in Davos, Switzerland that there is a very high possibility that the United States will pass stablecoin laws this year.
“The digital dollar is happening around the world, and other governments are regulating digital dollar currencies ahead of the United States. So I think there’s a very strong desire to take action and maintain U.S. leadership and put in place appropriate consumer protections,” Allaire added.
The U.S. Payment Stablecoin Clarity Act aims to bring stablecoins under the same regulatory framework that governs traditional financial services companies. The bill was passed by the House Financial Services Committee in 2023 and submitted to the House for deliberation, but the bill has not yet been approved by members of the House of Representatives. Dante Disparte, chief strategy officer and global public policy director of Circle, also agreed with Allaire's view that the United States will introduce stablecoin rules in 2024.
In fact, Canada was the first country to take action. It was the first country to enact cryptocurrency legislation, and many investors regarded it as an indicator of the bill. The Canadian Securities Administrators (CSA) issued new regulations on cryptocurrencies in February 2023, significantly tightening the scope of supervision and treating trading platforms strictly.
When applying for registration as a platform operating in Canada, the company must provide an "Enhanced Pre-Registration Commitment" (PRU) within 30 days, which requires the segregation of trading and custody assets, prohibition of providing margin, credit or leveraged trading, and prohibition of the unauthorized sale of stablecoins and proprietary tokens.
The last one is particularly critical, which led to Binance, the exchange that issued Binance Coin (BNB), announcing its withdrawal from the Canadian market in May, but emphasized that it hopes to return in the future. At the same time, stablecoins are also facing the risk of withdrawal, and the remaining exchanges have suspended users' USDT stablecoin transactions. Coinbase and Kraken took practical actions last year.
Soon after, China's Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly released eight typical cases of punishing foreign exchange-related crimes, mentioning that converting virtual currencies such as USDT into RMB is an illegal foreign exchange transaction.
The head of the Fourth Procuratorate of the Supreme People's Procuratorate said that the cases released this time are mainly aimed at cross-border illegal foreign exchange transactions. Cross-border illegal foreign exchange transactions are one of the typical manifestations of illegal foreign exchange transactions. In such cases, RMB and foreign currencies generally do not physically circulate across borders. On the surface, funds circulate in one direction at home and abroad, but in fact, they are disguised foreign exchange transactions, which disrupt the order of the foreign exchange market. In serious cases, they constitute the crime of illegal business operations.
The State Administration of Foreign Exchange of China finally pointed out that in the next step, it will continue to work closely with the public security organs, the People's Bank of China and other departments to crack down on illegal crimes such as underground banks, promote the improvement of foreign exchange service levels, and facilitate enterprises and individuals to conduct foreign exchange business through legal channels.
Summarize
Although the regulatory crackdown by major economies such as North America, China and the United Nations has had a direct impact on the stability of USDT, the "decoupling from the US dollar for many days" faced by USDT has caused market concerns. However, in the context of the deep binding of stablecoins and the cryptocurrency industry, USDT is expected to re-establish its anchor relationship with the US dollar.
