Tether’s lawfare spotlights an FTX-like problem with the current crypto regulations in

Chatter on social media suggests a new stablecoin law proposal that could bar offshore stablecoin issuers like Tether from holding US Treasuries. The proposal has been likened to a bill pushed by beleaguered exchange FTX and its then CEO, Sam-Bankman Fried, in 2022, who tried to shape regulations to benefit the exchange and impose regulatory burdens on DeFi protocols.

As reported by Cryptopolitan on Tuesday, Tether CEO Paolo Ardoino accused competitors of not focusing on creating competitive products and looking to “take out” the stablecoin issuer through political and legal means.

“While our competitors’ business model should be to build a better product and even bigger distribution network, their real intent is ‘Kill Tether,’” Ardoino wrote on X. “Every single business or political meeting that they have culminates with this intent.”

His comments were a response to Hiframework CEO Vance Spencer, who suggested that the upcoming stablecoin legislation could bar offshore stablecoin issuers from accessing US Treasuries. 

Through a February 24 X post, Spencer purported the rumored laws as a “blatant attempt at regulatory capture by US players,” done at America’s national interest expense.

Echoes of a cold war, similar to FTX pre-collapse era

Spencer recalled how the crypto industry once united in 2022 against what he described as “toxic legislation” pushed by FTX that Congress almost passed had FTX not become bankrupt.

FTX lobbied Democratic policymakers during the Biden administration to push for the Digital Commodities Consumer Protection Act (DCCPA) in 2022. The bill sought to grant the Commodity Futures Trading Commission (CFTC) greater oversight of digital assets classified as commodities. 

Yet, critics argued that the first drafts of the proposed law were designed to cripple decentralized finance (DeFi) to create a market “demand” that FTX would interestingly step up to satisfy.

According to watchdog group OpenSecrets, FTX lobbied for the DCCPA more than any other crypto-related legislation that year. Brandon Neal, COO of DeFi protocol Euler Finance, told CNBC that Bankman-Fried attempted to change the bill to deter the progress of decentralized finance.

Now, Ardiono is cautioning the industry against some entities trying to lobby lawmakers to create an unfavorable regulatory environment for companies based outside the US jurisdiction.

On February 4, Republican Senator Bill Hagerty introduced a stablecoin bill in the Senate earlier, proposing requirements that would mandate stablecoin issuers to back payments with US Treasury bills, dollars, and Federal Reserve notes. 

Shortly after, lawmakers held a press conference announcing the formation of a working group dedicated to drafting rules for crypto and fiat-currency-backed stablecoins.

Jeremy Allaire, CEO of New York-based company and USDC issuer Circle, told Bloomberg yesterday that issuers of US dollar-backed stablecoins should be registered in America.

“It shouldn’t be a free pass, right? Where you can just ignore the US law and go do whatever the hell you want wherever and sell into the United States,” Allaire said, seemingly taking a dig at competitor Tether.

Ardoino then took to social media to clap back at the USDC head, stating, “ We’ll stand strong to protect the hundreds of millions of people around the world that are left behind by the traditional financial system, to help them access the US Dollar via USDT. while our competitors are ready to endanger these communities in their greedy quest for monopoly.”

Stablecoin regulatory concerns cause crypto community to react

On X, Crypto industry KOLs have sounded the alarm over what they perceive as a new wave of “anti-competitive” regulatory efforts. 

“What’s even worse than having no crypto regulations is having the wrong crypto regulations,” Coin Bureau CEO and co-founder Nic Puckrin remarked. “Rumors that certain companies are lobbying Congress to implement laws that harm market leaders offshore are troubling.”

Former US ambassador Richard Grenell also supported Puckrin’s sentiments, accusing US crypto players of using regulatory tactics to manipulate the market.

“There’s a disturbing trend in crypto where the same players who once backed far-left candidates & policies, the very people behind Operation Chokepoint 2.0, are now manipulating the system again to eliminate competition,” Grenell surmised. “This is not only the wrong path for the U.S. but also completely at odds with MAGA.”

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