Bloomberg published an editorial warning of the dangers for the traditional financial system with the combination between the cryptocurrency company Tether Limited and the upcoming Donald Trump government in the United States.
The media highlights that the Trump-Tether duo “presents quite a few potential problems” and that two in particular stand out.
First, the more Tether grows, takes risks, and interfaces with Wall Street firms like Cantor Fitzgerald, the financial firm of Hotward Lutnick, the future US Commerce Secretary; the greater the possibility that “crises in cryptocurrencies will infect the financial system in general.”
Second, Bloomberg suggests that the interconnection between both ecosystems could facilitate the transmission of instability from the cryptocurrency market towards conventional financial institutions, complicating global financial stability.
The publishing company believes that a “resurgent Tether” could expand opportunities for illicit activity“undermining the ability of governments to fight crime, counter terrorism and enforce sanctions.”
This is because Tether, as a stablecoin, could serve as a medium for transactions that evade surveillance and regulationthus allowing malicious actors to operate with greater impunity, as suggested by the Bloomberg editorial board.
The editorial notes that the transaction volume of USDT, Tether’s flagship stablecoin, more than doubled after the election where Donald Trump was elected, totaling around USD 4.6 trillion in November. This explosion in USDT usage underscores concerns about stability and regulation.
Congress must intervene, says Bloomberg
Bloomberg says that, due to the rise of stablecoins and Tether specifically, “the ideal would be for Congress to impose order.” This, requiring stablecoin issuers to “only hold safe and liquid assets and take on much greater responsibility for monitoring transactions and reporting suspicious activity.”
Tether is the issuing company behind the USDT stablecoin, a cryptocurrency whose value is tied to the US dollar to maintain its stability. It is the largest stablecoin by trading volume and currently the third most valued cryptocurrency on the marketwith a capitalization of 139.3 billion, according to CoinMarketCap.
Bloomberg’s warning comes in a context in which Europeans say goodbye to USDT due to the MiCA regulation, which forces cryptocurrency companies operating in the European Union (EU) to remove that stablecoin from their offer. since it does not have the requirements to be able to circulate in the bloc countries.
In November 2024 it was learned that the incoming Trump administration held meetings with Tether. Commerce Secretary Lutnick discussed receiving support from Tether for a multi-million dollar program, as reported by NoticiasVE.
This interaction between the Trump administration and Tether adds another layer of complexity and concern on how the cryptocurrency landscape could evolve under the new policies, according to Bloomberg.
This relationship between Tether and a government with a pro-cryptocurrency agenda could, according to Bloomberg, destabilize not only the cryptocurrency market, but also the global financial system if it is not managed with care and adequate regulation.