U.S. lawmakers, including Representatives Zach Nunn and Abigail Spanberger, have collaboratively introduced the CLARITY Act of 2023. This proposed legislation aims to limit federal government officials from participating in transactions with Chinese blockchain entities.
The proposed act would prevent government employees from utilizing the underlying infrastructures of Chinese blockchain or cryptocurrency exchange platforms. Additionally, it explicitly prohibits U.S. government officials from participating in transactions with iFinex, the parent company of Tether, the issuer of USDT.
Beyond iFinex, the CLARITY Act extends its restrictions to transactions involving the Spartan Network, the Conflux Network, and Red Date Technology.
In a statement released on Wednesday, the lawmakers highlighted that the legislation, if enacted, aims to safeguard the nation against potential vulnerabilities, ensuring that “foreign adversaries” cannot access crucial national security intelligence and the private information of Americans.
Clarity Act Unveils Tether’s Exposure to Chinese Securities and Entities in 2023
In 2023, Tether found itself exposed to Chinese securities and other firms. On June 16, multiple sources, including Bloomberg, reported that Tether had previously held securities from state-owned Chinese enterprises.
According to documents from the New York Attorney General, entities such as the Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China were highlighted for their involvement in supporting Tether.
This disclosure followed years of scrutiny regarding the assets supporting Tether’s stablecoin. Tether’s reserves included significant short-term loans to Chinese companies and a substantial loan to the cryptocurrency platform Celsius Network.
Uncovering Tether’s Chinese Securities Holdings: SEC Monitoring, CLARITY Act, and Cryptocurrency Concerns
Although Tether had denied ties to the debt of China’s Evergrande Group, it had not disclosed its holdings of other Chinese securities.
The U.S. Securities and Exchange Commission (SEC) is actively monitoring Tether’s operations. According to a September report, the company quietly began offering USDT stablecoin loans to customers. This occurred a year after pledging to stop providing secured loans.
The introduction of the CLARITY Act reflects Washington’s escalating concerns about potential Chinese affiliations within the cryptocurrency sector.