Bloomberg warns of catastrophic risks from Trump crypto policies and Tether practices
Bloomberg warns of potential instability stemming from Tether and Trump’s administration.
The intersection of cryptocurrency and politics has taken center stage as Bloomberg warns of potential financial instability stemming from Tether and its ties to Donald Trump’s next administration.
Critics allege that Trump’s crypto-friendly stance could amplify risks associated with Tether’s opaque practices, according to the Cryptopolitan.
Tether, designed as a digital dollar, promises to maintain a 1-to-1 backing with traditional currency. However, Bloomberg claims its reserves include a mix of risky loans, Bitcoin, and other ill-defined assets, raising doubts about its solvency.
Over the years, Tether has been linked to investigations involving international crime, adding to the scrutiny.
Wall Street Connections and Escalating Risks
A key point of contention is the involvement of Howard Lutnick, Trump’s commerce secretary nominee and CEO of Cantor Fitzgerald, which holds a 5% stake in Tether. Lutnick’s firm reportedly earns millions in custody fees and plans to expand Tether’s lending operations against Bitcoin.
Bloomberg argues that deeper integration with Wall Street magnifies the chances of a catastrophic fallout, especially if Tether’s reserves falter.
Trading volumes surged post-election, with Tether moving $4.6 trillion in November alone. Critics warn that its collapse could trigger a financial crisis, with ripple effects spreading to traditional markets.
Trump’s rumored plan to create a Bitcoin reserve has also drawn fire. The proposal, championed by crypto-friendly politicians, envisions the U.S. government acquiring over a million Bitcoins. Bloomberg labels the plan “a speculative gamble,” warning it could inflate Bitcoin prices and burden taxpayers.
While Tether denies any wrongdoing, Bloomberg’s warnings underscore growing tensions between the crypto world and regulators. With Trump’s policies likely to shape the market further, the debate over Tether’s stability and its broader implications is far from over.
President-elect Donald Trump is reportedly considering creating a U.S. Bitcoin Strategic Reserve without Federal Reserve approval. Fed Chairman Jerome Powell dismissed the idea, stating, “The Fed is not the place for Bitcoin.
