New York Attorney General Letitia James has issued a strong warning to the U.S. Congress, raising concerns about foreign stablecoin issuers—especially Tether (USDT)—and labeling them a potential risk to the U.S. economy.
James emphasized that stablecoins should be fully backed one-to-one by U.S. dollars or Treasury securities and stressed that issuers must be based in the United States and subject to U.S. laws.
She criticized Tether for operating outside of the U.S. and holding reserves not only in Treasuries but also in Bitcoin and precious metals, which she claims could pose a threat to financial stability. James noted that Tether holds 94.5 billion dollars in U.S. Treasuries—roughly 55% of daily Treasury market volume—and warned that a crypto market collapse could trigger a liquidity crisis. She also pointed to Tether’s relocation to El Salvador and past controversies regarding its reserves, calling for stricter regulation of the stablecoin industry.
