Tether Introduces Controversial ‘Travel Rule’ to Combat Financial Crimes

Tether Holdings Limited – issuer of the stablecoin USDT – has announced the integration of Notabene’s end-to-end solution to comply with AML (anti-money laundering) laws and combat cross-border crime. 

Tether to Comply with AML and KYC Laws

As per an announcement on October 26, Tether will test Notabene’s platform to facilitate compliance with the Crypto Travel Rule, a mandate established by global financial watchdog Financial Action Task Force (FATF) on June 20, 2021.

The mandate stipulates that Virtual Assets Service Providers (VASPs) (such as crypto exchange and stablecoin issuers) should be regulated in the same way that regular financial institutions do. Thus, VASPs would have to comply with AML and KYC laws, providing descriptive information between counterparties when transferring digital assets.

It’s important that we work with other large VASPS to build this industry from the ground up. We see this as an opportune moment to foster cooperation across traditional and digital channels in order to create better services for customers globally. We are proud to lead the charge on behalf of all stablecoins in order to make a positive change towards protecting our clients.

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Leonardo Real, CCO, Tether

‘Anyone Seen Tether’s Billions?’

Tether has repeatedly claimed its USDT reserves are a conglomerate of several assets, including commercial paper and fiduciary deposits, with only 3.87 percent in cash. Yet Tether’s detractors are not convinced.

Two weeks ago, Bloomberg released a hit piece targeting Tether, titled “Anyone Seen Tether’s billions?” The author, Zeke Faux, calls the company a fraud, and claims that the firm has loaned billions of dollars to various crypto companies, and that it holds debt with various Chinese firms, including real-estate giant Evergrande.