Howard Lutnick Calls for US Audit of Stablecoins, Including Tether
Howard Lutnick, the nominee for commerce secretary under Donald Trump, recently expressed the need for stablecoins, such as Tether, to undergo audits by United States firms. This statement comes in light of growing concerns surrounding the transparency and backing of these digital assets.
Regulatory Clarification
During a hearing, Senator Maria Cantwell (D-WA) questioned Lutnick about the regulations that would ensure stablecoins are adequately reserved. In response, Lutnick emphasized the importance of audits and holding treasuries as collateral to provide assurance in this regard.
Tether’s Audit Dilemma
Lutnick’s firm, Cantor Fitzgerald, which he plans to divest from if nominated, has significant involvement with Tether, the largest stablecoin in the world. Tether has been under scrutiny for not completing a financial audit despite promising to do so since 2014. This lack of transparency has raised doubts about the accuracy of Tether’s reserves and backing.
Furthermore, Tether has been accused of misleading the public about the quality and quantity of its reserves, with allegations of related party transactions and misrepresentation of assets in the 2018 fiscal year.
Confidence Amid Controversy
Despite Tether’s audit challenges, Lutnick has expressed confidence in the stablecoin’s reserves. However, this stance has been met with skepticism given the ongoing lack of transparency and accountability from Tether.
When reached for comment on Lutnick’s opinion, Tether did not immediately respond, further adding to the uncertainty surrounding the stablecoin’s operations.
Fighting Blockchain-Based Crime
During the hearing, Lutnick also highlighted the role of federal agencies in using artificial intelligence to combat blockchain-based crimes, including the misuse of USDT for activities such as human trafficking, fraud, and sanctions evasion. While Lutnick’s optimism is commendable, many experts believe that the complexities of blockchain tracing and AI limitations pose significant challenges in effectively addressing these issues.
Overall, Lutnick’s call for US audits of stablecoins reflects a growing need for transparency and accountability in the digital asset space, particularly in light of Tether’s ongoing audit woes.